BRBR - Earnings call transcript Q3 2020

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Operator

Welcome to BellRing Brands Third Quarter 2020 Earnings 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 passcode is 9248828. participants placed all mode. a time, this have in been listen-only At introductions. is turn Relations Meyer, for to my of floor Brands It pleasure Jennifer the now over to BellRing Investor

You may begin.

Jennifer Meyer

with supplemental fiscal joining Good and for third Paul With our Darcy thank slide prepared in afterward, and The have and today press are brief for remarks President a both Relations and and begin website session. XXXX morning, our that us remarks, and CFO. call. the section earnings Darcy CEO; question-and-answer you presentation posted BellRing SEC and we’ll today Investor our Brands these supports filings are Davenport, release me quarter Paul on will Rode, bellring.com. at the

are website. slides the In release available addition, and SEC’s on the

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

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

to non-GAAP For that, With website. GAAP measure, the a I issued the Darcy. to posted will these reconciliation our over on see call yesterday of nearest measures our and press turn release

Darcy Davenport

and million presentation quarter We you to metrics. our third EBITDA presentation as more sales thank supplemental is joining And XX.X posted Last million. adjusted reported well This of business, reported of into third our our provide Jennifer. Thanks as we this designed website. XXX consumption insight to all results and key for us morning. quarter evening, a

QX our half the would QX million, Outside our stock specifically, revenue sales XXX than the reaffirming actual trade mid-March category is of half be back quarter. planning. proving this roughly factored ended to coming to into expected guidance in QX More fall inflated As after of This With overbought highlighted the customers net due a of result plan the second on-the-go at results that up. slower in and we fourth at timing loaded. shift, RTD close a our expense out. half to occasion. with inventories expectations of July second XX% shy of were consumer following internal May, expected we our last elevated recovery as our mainly less quarter, we discussed sales we In second into the

saves Specifically, back dipping reaching we reaching improvement than shaped with sales and is by the forecast, in QX of levels levels down until million million low, the recovery, and July, to with from ended longer coupled saw forecasted after international June. quarter consistent which QX. our Instead, equally a not more we between pre-COVID from April $XX a $XX recovery, W this expected pre-COVID second half may split

assumptions growth in encouraging we QX experienced QX. seeing recovery in the signs consumption July category lowered the given are period, we RTD our choppy Although we

Premier brand Untracked way like and led Protein's performance channel Despite untracked EBITDA Premier across we COVID channels. both year, largest consumption full highlights, end strategies X.X%. category outpaced because up tracked combined with growing still third an our reductions Protein growth our strong strong our tracked outlook. XX% in Shake declined amazing channels quarter, half, I'd expect and half the deliver in However, against now track the quarter, this over in the to up our was while XX% headwinds, Ecommerce XXX%. of line focus the of progress non-strategic the year back the with expectations. original with to SG&A first in on

tracked tracked terrific reverse saw channels promotion. in while shifts, strong in driven channels. growth July up due faced drugs XX% headwinds also consumption has drive later by that marketing quarter. XX%, in July, timing continues to our XX% increased remained untracked and growth promotional in at and XX% and distribution up and food and respectively, the Untracked We to will

for our growth of to to continue in to be strategies, marketing programs Now strong RTD increased points the brand. quarter category. two Premier Protein drivers XX% the share the

Premier TDPs remains strategy increased to penetration substantially growth consumption to XX% in by and effective, the approximately advertising. promotional at including media, continue supported of year-to-date our X.X% quarter. Our Protein X% increase television driving household

powder will expanded Protein gaining we with our and which of Our welcoming pipeline product I'm next new to distribution. two oats velocities that are favorite excited of several over coming our well products next Pumpkin see and in products well new about Latte month. quarters. ranked including we in back this top Cafe sell personal Spice distribution, gained out the the my continues ships months, have to are and XX% the category. continue perform the well

other our by to ecommerce. good quarter Dymatize's X% led brands, had Now and business domestic at Club a

ranking Unfortunately, Our shown PowerBar's XX launch Dymatize has in Pebbles both Cocoa success Fruity of skews and where businesses continue result international top COVID. as ISO be the it and challenged of to quickly XXX a is sold.

supply Our stable. remains chain

given This a this and online team's us hard further location. achievement. gives During flexibility capacity plans. support environment, co-manufacturing proud additional we fifth This our COVID I'm challenging to our the the quarter successfully of growth on work brought was

Now to has than and and affected domestic created category pandemic our the the businesses. expected headwinds, our outlook, international recovery strong slower of both has

As our we lowered result, have half sales. back a

major the already have the books. lined sales year. including However, distribution we expect QX, promotions despite up, in in double we and significant retailers, still strong a have growth drivers digit most expanded growth we July those challenges, In net to for deliver

the runway I co-manufacturing our miss our opportunity reaffirm in to our have quarters, Given company confidence I'm thank we don't over now our expectations stressful and for forecast, our EBITDA innovation brand exceeded Paul. I our full navigating will in long year publicly the and I'm to first I happy our to distribution, guidance. continue all incredibly confident to employees proud two business growth. I momentum, QX the fundamentals the energized for achieve our and by to of our call ability pipeline partners am to times. and of want the for turn and we're expanded

Paul Rode

morning good sale everyone. and million quarter Darcy for the was Thanks million. Net EBITDA XX.X were adjusted XXX and

our COVID when results inventory by sales fronts. COVID quarter as Third net prior changes on several in anticipated quarterly year. compared were the of impact customer pressured well as impacted results levels as to

to levels quarter. the First, took retailers inflated reduce it their the for beginning RTD at of inventory from longer Shake on-hand

had Darcy Second as significant liquid detailed, the category headwinds. RTD

accounted largely expected. significantly sales compared our for with XX% net of historically XX%, Though was RTD of declined strong a last net March. Shakes consumption perspective, our Premier work we consumption net recovery Shipping's year. Protein the business, in many sales as Shake international sales which RTD impacts for down declined was and overbuy our has shipment than retailers through From these XX% slower category to Third, growth shipments lagged The XX%. between expected. disconnect an anticipated

left America, Club continues anticipated related the Dymatize XX% headwinds inventory the reflecting Club delivering to grew XX%, Additionally, combined last outweighed related poll net digit volumes for growth These declines had and growth second PowerBar half business, This distribution offset within brand We a of and across net quarter strong the partially distribution in by fourth lower channels in the strong promotion. channels. in XX.X%. gain from to we recall the North in portfolio an were growth quarter. and for overall resulting specialty channels, strong driven FDM optimization gains closures. double the declined by ecommerce consistently for shipments COVID which year's these sales driven in store by our growth and globally international ecommerce. while specialty decline in was sales impacts strategy

we decline COVID the quarter. now brand's strategy to have the expect moderate weigh optimization portfolio We results the in on North fully left the fourth should But America. that in

Turning XXX back in The a results, points of public cost, XX.X% Adjusted partially EBITDA with X points higher XX.X%. a profit of higher declining to a margin XXX million incremental primarily as of decrease XX% strategic related increased profit net for This expense. adjusted trade to gross basis compensation milk-based basis quarter, by XX.X SG&A the to quarter decline input sales spend of lower rate. XX%. margin margin with driven and of increase offset by to EBITDA and million increase proteins X.X a costs gross million, this percentage company promotion million declined was XX an consolidated XX.X%. marketing was of expenses anticipated

Before reviewing and flow liquidity. few like outlook, our to comments a on make cash I would

COVID as end. and repaid third created. quarter and With the available million the cash measure the of operations XXX in generating revolver a left million from our on strong borrowed XX XX hand under with million light of at us revolver flow uncertainty under cash we million XX.X we precautionary This have quarter our

was June leverage XX, of million net As debt times. was X.X net and XXX

Although year. fiscal prior leverage our expect with three XXXX. with this net quarter, We an reach end still increase leverage our compared net to in of expectations leverage times in year lower target is line last our it is fiscal adjusted from quarterly in and EBITDA to the given materially to

XXXX to Turning XXX our pleased XXX to we're adjusted million our outlook EBITDA fiscal year million. outlook, reaffirm of to

quarter down COVID, activity. will In to expectations specialty our be adjusted However, Protein, due we range and weighed sales based the distribution half of XXX gains benefit to the to promotional remaining fourth especially deliver by Shakes, driven that second spite on top domestic is We double-digit Premier by incremental RTD expected COVID strong to lingering line million. and COVID, headwinds, the have effects brands of international net from lower our million of XXX businesses. will [ph] growth which insist

than continued consumption ability that, net dynamics back as more double fourth growth to in I'd continue improved the and questions. strong quarter that quarter our strong over Overall, evidenced trend to July from Premier call and we the like quarter to to turn a to start of these operator result. Protein, digit the by fourth deliver sales, our net headwinds is off expected QX. have in we're which is Dymatize, to register gains for Category are and growth expect has XX% Club For confident COVID FDM. With third our in face the of the sales. continued great ecommerce, to a offset in strong

Operator

for from Barclays. open comes Instructions] of is questions. lot you. floor now Our Thank a Lazar question first of [Operator Andrew The

Andrew Lazar

Great, Good morning, thanks. everybody.

Darcy Davenport

morning. Good

Andrew Lazar

as and in tracked First seems are be as in mentioned, you trends in Darcy, drug shape as and off, to ecommerce in the food untracked. or good is Club channels Club

sense it's primarily that's the If mass seem case, that in timing and a promotional some channels that So we – get or sort else there's issue to going the that see of to there to start it towards think, when in in expect some something which tracked we tracked of is I some does improve? on scanner. of the data it is would of was data, mass of trying see look and like to that all weighted, heavily primarily to start

Darcy Davenport

Sure.

that harder than one mass the during in So things hit the we away stores stores consumer other of ecommerce. experienced and smaller stayed larger grocery QX COVID from the local favor that and Club of and was channels

we lapping in in mass of already So – and July that are Specific that later change our specifically both are July, and we're that so Club but there is improvement we specifically seeing tracked timing one and to and quarter. across improve. category consumption, turn brands, around in the aspect we seeing should promotional in are

Andrew Lazar

consumers you you that's if and think that 'XX. impressive a the little of that household into points we data or of just household will, forward great, repeat up you and what you is your obviously, you think you feel then type are be about XX% – if insignificant of of some or tally helpful. right, not that sort the think talked fiscal bit, makes Got the research rate, the gains repeat incremental guys rate like if telling can penetration going as stickiness, forward when it, think we so there you've penetration other trial And about any repeat, or we

Darcy Davenport

consistent through of the the past. future our prepared supplemental some mentioned I things metrics Yeah, deck one of the household from you repeat goes is pages see we website our biggest back basically perspective. XX%. I is the to give stays on my penetration, And at a XXXX And in key think of household of but broader remarks doubling you included time goes And one and almost follows that predictor the to pens now. around our rate in a of

haven't. see you so that And but you I I in household usually we penetration, repeat, there, mean, think a right when decrease increase

our because from for brand relatively So repeat the And scheme. we'll in but challenge it's penetration some to category. broader growth low in loyalty, confident the that we're us, that shown because opportunity is XXXX, we've been increase and the still strongest household X.X the of has always and has get that the great

Andrew Lazar

Thanks Darcy. much, so

Darcy Davenport

Thank you.

Operator

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

Ken Goldman

sales down much Hi, quarter, your little well that this necessary. really of was guidance. thank potentially gave some just a reasons yourself visibility little EBITDA in a cushion take just your bit consideration as you. structure, or you like not you EBITDA I more to do any there a wanted your you into cost us made why. to changes the little related downside Obviously, wasn't maybe just opportunity to some given bit and dig take they're that you feel feel but the sales the give and bit But number, to number to surprises of toward

Darcy Davenport

evaluated So our And actually we addition, been flight financial off. toward that and know, that then maintained sales forecasts over just we of you those it in within the both flexibility gave our half we our it into pandemic, we you running margins ensured P&L things of EBITDA first slightly were we the some have as long-term flexibility. entered when case algorithm. our EBITDA, high to end us some in forecast, And and our this

– many ways, to EBITDA. our deliver because ready So annual of commitment we were EBIT in wanted on this for we on

already. we visibility have into So QX good confident feel I

the so that's why – main and we that. reason didn't address And

Ken Goldman

Thank with And skew then up about follow that. to you asking wanted assortment. for I your

from quite the of? Or feel reduce some expected far? skews customers of number very talked meaningful limited products oat had Darcy a that pressure given something so product amount was your the would or well. as by for during you about You much of hoped didn't products, the have there doing more to already, than crisis Was your any you

Darcy Davenport

Yeah, there around really assortment. skew was no pressure

Ken Goldman

and sweet. Thank you. Short

Darcy Davenport

Thank you.

Operator

Our line question of ISI. from comes next David of Evercore Palmer

David Palmer

morning. Good Thanks.

was going the to first as looking Just marketing, I of consumer have was nine sales, remember spending you supposed and but up at like although basis I would advertising don't XXX for think almost looks points it to XXX your thought, – a which that basis advertising similar the and what that percentage up I the months, be was promotion points.

your similar with looking to sort in spend? it comment line are going I not what the level to maybe have the up in still fourth you you you words, So follow you gross you 'XX, of even, on year quick spending? In Is could even on then and thinking other or same were amounts have need And growth spending that plan another Do be year-to-date? in step up. there spending don't a need into up same of quarter? step that

Darcy Davenport

a rates, And back candidly, we spend strong smaller seeing if We most and around then half. smaller the in And had plan and Year in in our to is a strategy from to cetera. because softness benefits New in entering biggest the I'll standpoint people chose spend we which a A&P promotional into advertising the Paul move specific felt From category. it we're and spend our to has more will. the standpoint, strategy always cheaper QX et he to we QX when QX. very saw focus are in have QX like spend a then category on we add, are going hit plan that also Great, anything was eyeballs,

And not we – in have to QX, heavy is our because then So a to have of promotional we spend budget and specify, just small A&P will year, similar very the overall, we from will expected. spend. but our what media

advertising. the saw effective – On penetration, was was 'XX which this was question, household as our we goal. this our television first really year with in very year building It main

process planning the obviously, we that expect that 'XX. So right doing now. increase we're And in plan and to in of

David Palmer

issues probably with with unlucky of regard of takes how As many some and line, about then there's rate But into there's year. of work again, lot stock as recovery then will chain top we're how of we kind a this you're into your gives and on-the-go on-the-go supply this things should or year. – the 'XX, here lapping out knows far as issues you're looking God next the think to

So how – to is particularly as are chunks you as as gives to fiscal line? Thanks. model regard we in you top the thinking of about the try 'XX, and major takes it –

Darcy Davenport

Yeah, I do are category we right trends quarter, which we next July. the seeing detail 'XX, now in obviously don't to the think in but talk will on we're in in improved position

– we we was actually – although, – predicted. the predicted, are than it difference what only we actually about actually than we longer month we recovery So took a are

we So above pre-COVID July, seeing up liquid are category levels.

ways, it's in many with we what ways although, back many we original back believe to kind drive of We And business. know COVID, So to works category our a promises are there our to tailwind. the no having are but playbook. in

David Palmer

Thank you.

Darcy Davenport

Thank you.

Operator

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

Jason English

Hey, good morning, folks.

Darcy Davenport

morning.X Good

Jason English

you performances implies your pass on Darcy, your clearly guidance of snapback international but midpoint assuming for definitely a still reference pretty the July Dymatize, little I Yeah, Premier, of think quarter the growth, XX and around robust roughly magnitude I'm at caused footed terms PowerBar decline, bit speaking. your consumption XX% flat of a forecast next in I'm in down. hearing around

to mid if base portfolio quarter? me fourth that's right, level XX% that generally the for in incremental what's to aggregate – So off If digit in if get to single going the drive the and is somewhere growth high there. that tell the consumption in overall to I'm type the

Darcy Davenport

we in well in growth robust as so declines international right that have pretty expecting to exactly see continued business by Dymatize, PowerBar, every account, expecting Premier the category than in as the driven specifically you're it of specifically. more rebound a almost single been. we tailwind but has major so really promotions Shakes And being that's are Yeah, that we're of

actually very of perspective. – that point what's is is giving good least think the what's us shipment given we at have encouraging quarter candidly, And is that's to a what confidence. quarter, thirds this I from our in that visibility at two

Paul Rode

fourth favorable would other lapping the would add thing we – I quickly of add QX. in in comp thing the the load that, is some year recall were prior I The because that early only also to quarter

about So to benefit quarter. the that of fourth X% is

Jason English

we XX XX. don't this the have scenario XX you anything to six in world the for next And it. it could does little bit like cheat there perform see though level A question, case Okay. expect a volatility the business more I to believe to cheat be consistency, little world of in levels we I'm apologies. do part pre-COVID in, mean, in questions we should question, it should but And to even feel and look and up, I'm volatility try to a may your my year for quite second pre-COVID yet, Is much to we the anytime forward? months a hit for my going little there for from the But more? the around will the that's first, world to volatility And expecting Is this up why two ever business, as down follow up Why time. totally for punish like business at where a later me XX just post-COVID suppose. going pre-COVID going not the the a squeeze a of to durable? Jennifer's and I back. going manage not know up here I have some I'm unrelated to July, feel that type And I yet. expecting not anything then a is world which of second or

Darcy Davenport

question. great Yeah,

first the Okay, I'll hit one consistency. around

kind concentrations, we we some because lumpiness business naturally our have is in just a of So natural – of our Club quarter-to-quarter. have

what have This However, understanding that more that by are supplemental that you quarter-by-quarter, transparency see we you guys can to our usually around is just it be what year, because but at a year to some last had obviously deck start guys in predictability goal chance predictable. hopefully, we providing look and actually usually D between is there predictable, more be and loads. not promotional loads even promotions quarter-to-quarter should is capacity difference had constraints, and essence we the our

piece. the So first that's

The – like around it feel second agree world. I piece not is a we post-COVID just are does in

our our category, – I nutrition, TDs that mean, think hit piece on-the-go is dynamics One, have on-the-go even what's definitely X% think under up – I'm that is gotten so things down out some only and specifically down I most. are were usage I stacks. the the convenient indexing. X% you are XX% levels the pre-COVID and happening it bars when not versus to the July the some bars I within unique the still quarter Why of about TDs were bars of are our when in there – still about think still I unique before. in were on believe happening. People like is they were where occasion

the business. benefiting benefiting is the But as as over of food And seeing the nutrition. of side post-COVID is dynamics side and not medicine R it's nutrition side world. of However, nutrition can kind a some weight youth that adult health I benefit trends But of COVID are our also business, the what around actually and business. the proactive new really we're where management of hurting or candidly the indexing. from everyday sports or think those a some the It’s business in-home our

Jason English

much. very Thank you

Darcy Davenport

Thank you.

Operator

line next from comes Jefferies. the question Rob of Dickerson Our of

Rob Dickerson

Great, so thank you much.

at primarily discussed Club in maybe your for I the thought as percentage feel of and of a I used a you channel. home in benefit home, so right, guess on-the-go around if last the kind in so is a up like, some of So correctly, speak. maybe decent kind a medicine follow not call, consumption buying that product made equivalent I I obviously remember – of at consumes terms to overall buyer that how actually base

have to home, bases consume can product snacks, I category question you? the or if consumer food what consumption have of essentially you consumer that guess adjacencies your something it the potentially and/or I base about support So shift would at ongoing there think to other within is is, confections, relative do call more home at

Darcy Davenport

question. it's great a Yeah,

So right, you're is consumer home. XX% behavior XX%, as about or see what doing the at we these CPGs and those evaluating consumed business exactly our of in many changes at – other like we're are And house we're and adjusting.

So we've adjusted on it away which our strategy. focus Obviously, recipes our and always did very A&P we communication strategy, to products our has we been using social. right about more successful adjusted

leverage really talked would or I I we longer benefits standpoint, to some packaging about. go we we already of that the that product these trends different forward, think on on trends looking are to of the our looking out as have at kind some renovate at certain ways are be packages, then definitely and ideas that leveraging out we of can call call we use

Rob Dickerson

secondly, Okay, larger great. feel it's the that of later this kind are a category the into sports of of like the And industry, kind speaking the with then because within go this side, brewing supporting a case some as some and there's especially over there's other many in retailers that's nutrition, feels mean, higher specifically I the your growth more the that maybe players, shelf larger not players that category. could kind given people resets just of overall resets. so but category, more And year it specifically around within shelf right we right, food, through number still of benefit of actually bar a brands,

the Club, or focused about be we gain heavily, thing feel as the realize you Now trying reset maybe your do and but it further. that household go are through will you're potential as penetration process this consistent to right, different, how span on are you and promoting isn't I you is taking more as share

Darcy Davenport

think backend past excited upcoming the talked about be shelf change XX% bulk I've the and of in I the XX% – Yeah, split. a the of reset specifically I'm to really kind resets in the of more XX-XX the in spring, fall, about

our the to growing the larger coming brands, have brands. And so retailer in I explained you larger about we And up the visibility QX. that are think supporting specifically, resets what new

excited think that we're very gaining will space, to see significant resets I long our argue you but some which is overdue, show would and it. that I I'm

Rob Dickerson

on. to great Thank so much. hear. pass I'll That's you it

Darcy Davenport

Thanks.

Operator

next from Baumgartner of Our John comes line of Fargo. question the Wells

John Baumgartner

morning, thanks Good the question. for

Darcy Davenport

Hi, John.

John Baumgartner

Paul, is up I changes wanted for to that in gross pressure? of inflation seeing pressure dislocations into the would sort if much to the any the in COVID, come year-on-year with bit cost changes model, outsource inflation as inflation from in You dairy just outlook quarter between follow a cost leverage your given not the that components this drill your you're a forward? just promo. there. how mentioned the can impacting it last sourced there going more the you as cost comments in margins, Maybe was more detail quarter, pressure And the back and as Thanks. you of then down

Paul Rode

correct, perspective a from protein as well year, primary cost. two and last down is so spend our It you're really components. margins it's versus increase the quarter Yeah, promotional were the Sure. as in third milk increased

So it's kind split of really, drivers the margin side. XX-XX a the on from

made on we're kind benefit our after a been were but 'XX. protein look there's thinking markets of be protein bit been year. will that, of offset chain a somewhat recently, we may more and modest our that there, a those into do but of for year, initiatives costs dairy think bit temporary as there to headwinds That's we costs the expecting it's protein, side. – with so minor some expecting actually, protein marginal is not into that some there some have opportunity Protein go favorable, into and next some be based fiscal on as but we volatile, year, supply COVID. increasing, any still costs we As next we the went We milk headwinds little since have next weight higher been On for

John Baumgartner

And initiatives any moving terms the supply hedge changes or hedging? is to of guess, on in historically the still in have ability you more actually I norm there historically, than that to meet chain front up more to opposed any as chance just to

Paul Rode

several have Yeah, At implemented And different have some ways opportunities to continuing even at we're do time, evaluating past. in we're that. given we explore year strategies. we different strategies we're additional the in some there. executed this fiscal any looking And than to

way to to we're evaluate best mitigate find the to continuing So yeah, that.

John Baumgartner

Thanks Okay. Paul.

Paul Rode

Yeah, thanks.

Operator

make Kaufman on Our next question Pamela mute. of Pamela, Morgan Stanley. sure comes line of you're from the not

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

Brian Holland

on Thanks. have maybe questions One, from so two saying of gains about it just you're shelf Most is encouraging of shelf morning. quick follow how and given have sounds reset reset, good certainly which the Darcy, like the upcoming to kind in hear timer on. of line kind of the amidst out. was landscape to going pretty some been going you play that Good answered, distribution uncertainty sight my everything

the first you comfortable going with sight line into fall? you have very point feel maybe So on of clarification, gains just do distribution of

Darcy Davenport

will our our ones of but reset do. some we know business a have grocery and We'll already And happening will QX, in in we QX. those the Yes, yes, we for it's get minor see we in where side major some – the positive brand. land

Brian Holland

just know this you backdrop us some data job help COVID there puts out next But events did the referenced this. taking few and call as year lapped quickly I of that's watch Okay, just got just through great material the prior the obviously on the a then it. had walking been some promotional in there. over and throughout we data, understand scanner And of takes you scrutiny to period, the months, the

significant forward that lapping are we As the of no scanner that way the won't impact look couple repeated should we or we over might the that months, be events next way would that just maybe of other look. be mindful the one

Darcy Davenport

careful none, no I always ones. with want but be major to

year small different did handful actually But of basically different you specifically, year, only If is in And Club we had promotions, so we're we a now. this what's a last account. – our remember, promotions lapping retailers. of right all have we we in our promotion which almost mass, about only in did

Brian Holland

luck. of Appreciate best the color,

Darcy Davenport

Thank you.

Operator

Our Bill next the comes of from question Chappell Truist of Securities. line

Bill Chappell

Good morning. Thanks.

Darcy Davenport

morning. Good

Bill Chappell

think quarters, the I million I did to did hit it quarter, the little $XX over majority of happen back just model was comment go seems the understand, going just question, next queues. back and it two demand I was, miss inventory in we inventory like expected but issue. to it the than I'm happened or kind three that different trying to Because expected? equally or think a I First third be a the want of trade was to it to just

just So did not happen differently or we something the get did message?

Darcy Davenport

Yeah, things. I think there are two

the, for the the you of What about new the and what go rate which So you're was And QX that April we our category. to QX. at I is that work saw can then back at looking back we when April, do high if of a the back did we we mean, best hit a specifically of it and liquids, but on information actually hurt look category, but category that customer so recovery. thought the a not, was recovery I but W. – was QX. low the the were we the inventory QX, convenient talking job communicate to loaded end you'll of to end we Clearly, see benefited the script half, that of back week-on-week at the to clearly overall was And it and meant steady nutrition the need sure. in what clear, was we toward better kind the because

information that W continue that actually down was the We pre-COVID and – at went it back we would time as that levels June. expected Obviously, that of to that curve that talked gradually had I up with that about.

that visibility to obviously, honestly was miss customer So had as really opposed the high inventories. to the we

Bill Chappell

COVID kind Got it frozen tripling. sales lines, were up follow I say out what and kind same on thoughts are like saw, is, active that mean, and the declining, of if as ketchup of numbers current your reason – I and if of over the you the we your for of potatoes come nutrition's were

nutritious if comfort as And are so know gone and to more pause pounds nutrition the that active of this and a on growth out whether of slowly thought the there're to as it more reach of still everybody's would it. comfort and active and you food consumers some food coming didn't clearly or be trying permanent of there's come people kind back shed are on out

Darcy Davenport

so mean, are which picture this really big temporary I piece, reduction. Yeah, – is there's from perspective, a trend still on-the-go we the

come think and function start how all it's even there's as we as once with it. back more think learning starting will to people all about understanding vaccine, more – I virus to a the I as we're continue – that So

that improve. So I a starting is temporary that piece think already we're to

nutrition. I those that adult getting need sports management the somewhat when think is the you back. and area is I nutrition. that will is nutrition state, What's that weight benefiting hit everyday and look believe come at

into come nutrition think but hit get getting they to while, start et has cetera. as for been back So believe their a will I people – back I sports wanting health routines,

their fundamentals category improve want are the looking of strong. People to this So convenience. health. They are

So I rebound. will this have no category doubt that

Bill Chappell

Okay, for the great. color. Thanks

Darcy Davenport

you. Thank

Operator

comes Our of Montreal. Zaslow of Bank from line next Ken question of the

Ken Zaslow

morning, good Hey, everyone.

Darcy Davenport

Good morning.

Paul Rode

Good morning.

Ken Zaslow

does this growth affect How rate? long-term your

Darcy Davenport

It doesn't.

constraints, is you long-term planned year because EBITDA rate we had COVID on higher if was have a this to this to delivering lapping XX% growth algorithms. we're seeing XX% to we of planned what actually that with XX% still had growth – And the we were algorithm remember, because few margins. long-term to but long-term our we're So actually XX%

delivering be this year. However, over we thought we would

Ken Zaslow

question it and play did I'll fourth leave Okay, that when third quarter is to did And my out? how second there. quarter, the then quarter from you shift promotional second

Darcy Davenport

The promotional shift?

Ken Zaslow

you be you Yeah. a promotions the two fourth transcript. the made ago, Is there unless second going – not that And from to were third was the case? quarter the the misread I delaying quarters and to said and that mistake

Darcy Davenport

you're right. No, Yeah.

those we is things actually ended because but actually up this category saw quarter mainly because our So in moved were decline first Club this – so QX, our of call. promotion because QX quarter into the Club changed in happened, accounts, a their last what and to we and actually in accounts we so couple incremental doing an

we amount this thought were we with they year though even up of net-net in same moving. the actually So ended promotions

Ken Zaslow

Thank Great, I'll much. later. leave very you everything for

Darcy Davenport

you. Thank

Operator

Chris our And Growe comes line Stifel. final of question from of the

Matt Smith

Chris. on more like My at inventory the first this the the look at relates Could looks you question provided the position happens it slide Smith de-loading on fourth Hi, retail. to is in there's When Matt what to inventory potentially for that quarter? bars you go? talk about I

Darcy Davenport

that? take to want you Paul,

Paul Rode

the course, full fourth at third the having imbalanced inventory quarter Of of like out consumption. anticipate we Coming where deviations customers we quarter, feel yes. levels significant and shipments our between visibility, have so key are we do the not

Matt Smith

Okay, new the great. repeat those be repeat as to products on And the up talk how you then performance? the on products? would and based impacting penetration that rates you are my could are provided, repeat And benefit about then are varying follow household And relates rates there rates? it the new TDPs, of influencing that

Darcy Davenport

Sure.

and repeat your that you would distribution down. you repeat rates both So that is there kind rate expand things expand a rate go few is as and with you household expect that are buy of

see – that excited was I'm that years. the rate beginning I think is over about at really a the stable the saying that's very very is actually I what things we that's one of repeat

buy just in because feels from packs buy we're packs going regards are good. still we that rate, seeing in some Clubs with FDM, but mainly really So to smaller And very rate to decline in strong. big

I get answered your I So Did think everything? question. I

Matt Smith

you. Thank

Darcy Davenport

Thank you.

Operator

ladies And that was question. we our and call. conference do that conclude And with final today's gentlemen,

You and lines time at a this your wonderful may day. disconnect have

Darcy Davenport

you. Thank

BellRing Brands (BRBR) 7 Aug 202020 Q3 Earnings call transcript