BellRing Brands Inc (BRBR) Q1 2025 Earnings Call Highlights: Strong Growth and Strategic ...

Net Sales: $533 million, a 24% increase over the prior year. Adjusted EBITDA: $125 million, a 25% increase. Adjusted EBITDA Margin: 23.5%, exceeding expectations. Premier Protein Net Sales Growth: 26% driven by RTD shakes and powders. Dymatize Net Sales Growth: 13% with 12% higher volume.

Gross Profit: $200 million, a 35% increase with a gross profit margin of 37.5%. SG&A Expenses: $80 million, with advertising and promotion as main drivers. Cash Flow from Operations: $3 million in the first quarter. Net Debt: $790 million with a net leverage of 1.7 times. Share Repurchases: 143,000 shares at $77.12 per share and 550,000 shares at $72.79 per share.

Fiscal '25 Guidance: Net sales of $2.26 billion to $2.34 billion and adjusted EBITDA of $470 million to $500 million. Warning! GuruFocus has detected 5 Warning Signs with BRBR. Release Date: February 04, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points BellRing Brands Inc (NYSE:BRBR) reported a strong start to fiscal 2025 with net sales and adjusted EBITDA both growing approximately 25%, driven by Premier Protein. The company raised its fiscal 2025 guidance, expecting net sales growth between 13% and 17% and adjusted EBITDA growth between 7% and 14%.

Premier Protein continues to lead the ready-to-drink (RTD) segment with a 26% market share, maintaining its position as the number one brand in the convenient nutrition category. The company's innovation pipeline is robust, with new product launches such as the Premier Protein Indulgent line and a national marketing campaign that has increased website traffic by 80%. BellRing Brands Inc (NYSE:BRBR) has a scalable, regionally diverse supply chain, supporting its long-term growth projections and maintaining net leverage below 2 times throughout fiscal 2025. Negative Points The Dymatize brand faces domestic headwinds despite strong international performance, with the U.S. market pressured by rising whey protein costs.

The company anticipates mid-single-digit cost inflation throughout the year, driven by increasing whey and milk protein prices. BellRing Brands Inc (NYSE:BRBR) shifted approximately $4 million of marketing spend from the first quarter to later in the year, impacting quarterly financial phasing. The company faces challenges in expanding its share of shelf space to match its market share, indicating potential distribution inefficiencies. Despite strong growth, the company acknowledges the risk of moving too quickly with marketing, repackaging, and innovation efforts, which could strain resources. Story Continues Q & A Highlights Q: How is BellRing Brands growing differently this year compared to last year, and what are the key growth levers? A: Darcy Davenport, President and CEO, explained that this year is fundamentally different due to ample capacity, allowing the company to focus on demand driving.

Key growth levers include national advertising, expanded distribution, and increased promotions, particularly in the food channel. The company is also focusing on innovation and display promotions rather than deep discounting. Q: What is the outlook for Dymatize, especially considering the strong international performance? A: Darcy Davenport noted that Dymatize's international business, which constitutes about 40% of the global brand, is expected to remain strong throughout the year. However, the U.S. market faces pressure due to rising commodity prices.

Overall, the company anticipates single-digit growth for the global brand. Q: Can you provide an update on the national advertising campaign for Premier Protein and its early results? A: Darcy Davenport stated that the campaign launched at the end of December and is generating strong early results, with increased website traffic and online searches. The campaign was well-researched, with test markets meeting or exceeding expectations, and some creative adjustments were made to improve the spot. Q: How is BellRing Brands addressing the convenience store channel and the impact of GLP-1 drugs on their business? A: Darcy Davenport mentioned that the convenience store channel is a future opportunity, representing about 10% of the overall category. Regarding GLP-1 drugs, they are tracking closely and estimate that GLP-1s contribute about 25% to their growth.

The penetration of GLP-1s is stabilizing, but they continue to see a positive impact on their products. Q: What are the expectations for cost inflation and its impact on the business? A: Paul Rode, CFO, confirmed that the expectation for mid-single-digit cost inflation remains unchanged, driven by market dynamics in whey and milk proteins. The company anticipates a more favorable cost environment in the first half of the year, with some unfavorable shifts in the second half. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.

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