BRBR - NYSE

Good day, and welcome to the BellRing Brands Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the call over to Jennifer Meyer, Investor Relations for BellRing.

Good morning, and thank you for joining us today for BellRing Brands second quarter fiscal 2023 earnings call. With me today are Darcy Davenport, our President and CEO; and Paul Rode, our CFO. Darcy and Paul will begin with prepared remarks and afterwards we'll have a brief question-and-answer session. The press release and supplemental slide presentation that support these remarks are posted on our website in both the Investor Relations and the SEC filing section at bellring.com. In addition, the release and slides are available on the SEC's website. Before we continue, I would like to remind you that this call will contain forward-looking statements, which are subject to risks and uncertainties that should be carefully considered by investors as actual results could differ materially from these statements. These forward-looking statements are current as of the date of this call and management undertakes no obligation to update these statements. As a reminder, this call is being recorded and an audio replay will be available on our website. And finally, this call will discuss certain non-GAAP measures. For a reconciliation of these non-GAAP measures to the nearest GAAP measure, see our press release issued yesterday and posted on our website. With that, I will turn the call over to Darcy.

Thanks, Jennifer, and thank you all for joining us. Last evening, we reported our second quarter results and posted a supplemental presentation to our website. I'm pleased to share that our first half performance was strong, with Q2 results above our expectations. The business is steadily accelerating and gaining momentum as we bring on new capacity and begin to drive demand. Net sales grew 22% over prior year and EBITDA and adjusted EBITDA was up 34%. We continue to see higher shake production leading to higher in-stocks, which is driving higher consumption at the shelf. You saw last night, we raised our outlook for the year. We now expect net sales to grow between 17% and 21% over fiscal 2022, with adjusted EBITDA to grow 18% to 23%. Our better-than-expected first half performance along with strong consumption trends and continued category momentum drove our decision to raise the top- and bottom-line. In addition, the updated guidance factors in lower-than-expected input costs in Q4. Let's start with shake production. We saw double-digit production growth this quarter, as we finished lapping the worst of our supply constraints. Our capacity expansion plans are on track with annual production expected to grow low double-digits in fiscal 2023. Our bottle co-manufacturer is performing above our expectations in our newest Tetra co-man had a smooth start up in Q2. As a reminder, our two greenfield facilities were scheduled to come online in Q4. One of these co-mans is slightly ahead of schedule, however, we are not expecting meaningful contribution from either of these new co-mans until fiscal '24. Our incremental capacity in '24 is expected to be north of 20%, setting us up for many years of robust shake growth. Now to our category and brand updates. The convenient nutrition category remained strong at 16% in Q2, accelerating 2 points compared to prior quarter. Ready-to-drink was at 21% and ready-to-mix grew 24%. Both segments are growing despite price increases and continued capacity constraints across the RTD competitive set. Everyday and sports nutrition segments are driving category growth, as more consumers seek functional food and beverages and pursue their fitness goals. New powder products, in particular, are boosting sports nutrition growth. Premier Protein shake consumption strength accelerated this quarter, up 22%. Growth was robust across all key channels with the highest growth in food and mass, as those channels were the most impacted by our capacity constraints last year. The eCommerce channel returned to growth this quarter, as our bottle supply is now sufficient to meet demand. In April, overall shake consumption continued to grow at 31%, demonstrating continued strength. Our brand metrics made great strides this quarter and reflect the strong momentum we are feeling in the business. Premier Protein market share ended the quarter at 19%, up 130 basis points versus year ago. And I am proud to share that across tracked channels, the brand became not only the number one brand in the RTD segment, but also the number one brand in the convenient nutrition category. This is especially exciting given we still had limited SKUs on the shelf and hadn't started meaningful marketing and promotion. I'm pleased with the progress Premier Protein made in household penetration this quarter, with the brand increasing 3% versus Q1, reaching 14.2% of households, the highest in the category. We expect to steadily grow households as we increase items on the shelf and restart marketing and promotion activities. Our repeat and buy rates are holding steady, demonstrating our consumer loyalty. Excuse me. Premier Protein powder has more than doubled this quarter, with consumption up an astounding 123%, beyond our first-ever national marketing campaign. It exceeded our expectations, driving record-breaking sales and household penetration for the product. We continue to be excited about the growth potential for Premier Protein in this incremental format. Turning to Dymatize. The brand had a great quarter, with consumption dollars up 38% across tracked and untracked channels. We saw double-digit growth in nearly all channels, driven by distribution gains, pricing and promotion. The brand strength continued into April with consumption up 32%. The one exception was club, where we went from two full-time items in '22 to one full-time less expensive item this year. Consumption on the new SKU is performing well. Our strategy around expanding Dymatize to mainstream channels is working. Market share and TDPs reached all-time highs this quarter and household penetration continues to grow. We ended the quarter with 5.5% market share in tracked channels. Encouragingly, as Dymatize adds new households and distributions, repeat and buy rates are holding steady. In closing, I am encouraged by our first half progress. In almost every part of our business, whether it is brand, format or channel, we are gaining momentum. Our category continues to show remarkable growth on strong macro trends tailwinds. Premier Protein reached the number one share of both tracked RTD and the entire convenient nutrition category for the first time. Premier's household penetration is back to growth. We are expanding shake capacity and are now only months away from a step change in our shake production run rate. We are reintroducing our full range of Premier Protein shake flavors and restarting marketing and promotion. Premier Protein powder and Dymatize consumption are rapidly climbing, bringing mainstream consumers into the category. We have a deep innovation pipeline that will help fuel our future growth. Lastly, and I would argue most importantly, our culture is thriving. For the seventh year in a row, we earned the Great Place to Work certification. Our U.S. employees voted and received -- and we received our highest average score ever, with 93% of our U.S. organization said that it was a great place to work. We remain confident in our long-term outlook for BellRing and look forward to providing further updates next quarter. Thank you for your continued support. I will now turn the call over to Paul.

Thanks, Darcy, and good morning, everyone. As Darcy highlighted, our second quarter and first half performance was strong. Net sales for the quarter were $386 million and adjusted EBITDA was $68 million. Net sales grew 22% over prior year and adjusted EBITDA increased 34% with adjusted EBITDA margin of 17.6%. Starting with brand performance. Premier Protein net sales grew 26%. Higher average net selling prices contributed 20% to overall growth. Volumes grew 6%, reflecting increased shake production compared to year ago and strong growth for Premier powders. Shake net sales growth of 22% was in line with consumption growth in the quarter. Dymatize net sales grew 11% compared to year ago, benefiting from higher net pricing, organic growth and increased brand investments, offset slightly by 1% lower volumes. As expected, volumes were negatively impacted by the lapping of our strategic discontinuation of certain Dymatize products. In addition, club volumes declined as we lap distribution changes and the impact of load and timing this year. The combination of these items was an approximate 23% headwind to the net sales growth rate in the quarter. Excluding these items, net sales growth tracks closer to consumption growth. Gross profit of $117 million grew 35% with gross margins of 30.4%, up 280 basis points. Our pricing actions continue to offset significant inflation. The increase in gross margin was largely driven by lapping prior year supply chain inefficiencies and favorable freight rates. Excluding one-time separation cost, SG&A expenses as a percentage of net sales increased to 180 basis points. Our marketing spend accounted for the majority of this increase as we invested behind Premier Protein powders and Dymatize. Before reviewing our outlook, I would like to make a few comments on cash flow and liquidity. We generated $20 million in cash flow from operations in the first half of the year. Net working capital increased in Q2, primarily driven by higher raw material inventory. We expect to generate much stronger cash flow in the second half as our working capital increase largely reverses, driven primarily by lower raw material and optimized Dymatize inventory levels. We are already seeing some of the working capital timing reversed in the month of April as we generated approximately $23 million of cash, excluding financing activities. As of March, net debt was $954 million and net leverage was 3x. With our expected EBITDA growth and strong cash flow generation, we continue to anticipate net leverage to be lower than 2.5x by the end of fiscal 2023. With respect to our share repurchases this quarter, we bought 900,000 shares at an average price of $29.74 per share. Last week, the Board approved a new $80 million share repurchase authorization. Turning to our outlook. We raised our fiscal '23 guidance for net sales to be $1.61 billion to $1.66 billion and adjusted EBITDA of $320 million to $335 million. The updated guidance reflects our better-than-expected first half results, strong consumption trends in category growth momentum. Our outlook for EBITDA is tracking modestly higher, factoring in higher net sales as well as lower-than-expected input costs in Q4. For Q3 net sales, we expect mid to high teens percentage growth compared to prior year, with both Premier Protein and Dymatize growing double-digits. Approximately two-thirds of the overall growth is expected to come from pricing and the remainder from volume. We expect Q3 gross profit margins to modestly step up versus Q2, with further margin expansion in Q4. Likewise, we expect adjusted EBITDA margins to step up each quarter. Q3 adjusted EBITDA dollars are expected to be flat to prior year, as sales growth is offset by higher advertising and other G&A expenses. Before wrapping up, I want to review our capital expenditures guidance. We now expect to spend approximately $6 million this year, as we invest in systems and process improvements to support our long-term growth. In closing, we are pleased with our first half momentum. Our strong first half results gives us greater confidence in our full year outlook and long-term growth prospects. I will now turn it over to the operator for questions.

Thank you. [Operator Instructions] Our first question comes from the line of Jason English with Goldman Sachs.

Hey, folks. Thanks for swapping me in. I appreciate it. Can you give a little more context around the pace and magnitude of the re-engagement you're talking about in terms of marketing and merchandising activity going forward? And on a related topic, because they always kind of tie to margins, we're looking at the high protein whey cost and they fallen precipitously in the recent months. And I think we're now tracking with substantial down like 36% year-on-year levels. When would you expect that to flow through, begin to flow through? And how much of that upside would you expect to reinvest back in the belly of the portfolio or belly of the P&L to keep the revenue going? Thank you.

I'll start and...

Thanks, Jason. Go ahead.

Go ahead, Darcy.

Well, I was just going to hit the marketing question, you can answer the second one. Just from -- Jason just from our demand driving activities, we -- you didn't ask about the new flavors, but we started shipping the new flavors at the end of this quarter, didn't really hit consumption until April, from a marketing standpoint. We did have marketing. First of all, Dymatize will be pretty steady Q2 to Q4. We had some marketing on basically the -- on Premier Protein powders. And then, we'll start on the rest of the shake support in Q3 and Q4. And it's still pretty light through Q3 and Q4 as we were basically just starting to communicate to our consumers again, as we anticipate more demand driving in '24. And then, I'll hand it to Paul from a dollar standpoint and then your second question.

Yeah. So as far as marketing investments, so in Q2 we spent just over 3% of net sales. We expect the second half to be similar, so we are definitely investing behind the marketing, but at consistent levels that we saw in Q2. As we look at next year, we'll revisit if that is increased. But from a fiscal 2023 perspective, we expect to spend around 3% or so of net sales on marketing. As far as protein, so we did, as you saw -- we brought our guidance up on EBITDA and called out in my prepared remarks that we do expect gross margins to improve in Q4 or to grow in Q4 sequentially from Q3 and that's largely because we are starting to see some benefits from protein costs, primarily on our powder business, not so much on shakes yet, that's -- we think that's more in fiscal '24. But we do expect to start to see. And then, to your point, in fiscal '24, we expect to see more meaningful protein reductions. However, we do have some other offsets. We do have inflation in some other areas of our supply chain and packaging. So, we've seen that step up and that starts to step up on our second half. But those are -- from a protein perspective, we do start to see some of it in Q4, but really it's more fiscal '24 on shakes.

Okay, that's helpful. And as those lower costs flow through, is there a risk that pricing will flip negative as you reengage on promotions, merchandising at retail?

Darcy, do you want the retail question?

Yeah, I think that we expect -- I mean, it's pretty common in especially the powder side of the business that as commodities go up and down that you basically offset it with promotions. So when it goes down, you lean into promotion a little bit more. And so that's how you really manage the pricing of the commodities.

Hey, Jason, our shakes, as we look at '24, we expect it to be more of a normal promotional calendar versus a very light promotional calendar '23. So, we do expect some modest headwinds from pricing there, but -- as protein costs come down.

Yeah, got it. Makes sense. Thank you.

Thanks, Jason.

Thank you. One moment for our next question please. And our next question comes from the line of Bryan Spillane with Bank of America.

Thanks, operator, and good morning, everyone. I just had one -- just wanted to cover one area, which is, if we look at the performance for shakes in the quarter by channel, right, and the tracked channels outperforming untracked. I'm assuming part of that is because club was getting more priority when you were capacity constrained. So, A, is that true? And then, B, as we kind of look out over the next couple of quarters, would we expect to have this sort of same relative channel performance, meaning that the tracked outperforming the untracked channels?

All right. So, you're right in -- the food and mass definitely got hit the hardest with our capacity constraints last year. So, we're lapping that now, and that is why you're seeing tracked channels outperform untracked. We should -- and you're right, we should expect to continue to see that. I guess the other dynamic, Bryan, is, we just -- we're under distributor -- we're under distributed in food and mass. So, we have a lot more upside from a distribution standpoint in food and mass. So, I think as we start shipping our flavors, just food and mass, the paused flavors as well as continue to launch new ones, there's more distribution upside.

Okay. And if I...

Bryan, if I could add one thing, the one thing I would add is that, FDM is a more complicated channel and that has a lot more flavors and pack sizes, where club is a limited SKU environment. So you mentioned prioritization, but it is more complicated, which is why we took a little bit longer to get to some of those flavors and pack sizes fully back to bright because it's just a little more -- it takes a lot more SKUs to manage.

Okay. And then just one follow-up to that. Should we expect as you exit fiscal '24 that you'll have kind of the assortment, where you want it, right? Now that you've got more capacity available, you'll have the flavors that you want the pack [size fit] (ph). But at what point in the future do we expect that you're going to be playing with basically at full strength, right, in terms of assortment?

Yeah, by the end of -- I would say, by the end of calendar '24, we will have gone through a full cycle of resets and we will have our full existing portfolio on the shelf, and then it will be about new items, innovation, et cetera.

Okay, thank you.

Thank you. One moment for our next question please. And our next question comes from the line of Ken Goldman with J.P. Morgan.

Hi. Thank you. How do we think about your ability to maximize capacity in the new plants into next year? And I realize, you're not prepared to give any formal guidance into next year and of course there'll be some kind of production ramp-up period. But it feels to me, looking at the Street's numbers, the Street is looking at under 12% sales growth for you next year, but you're going to have so many tailwinds from that supply chain expansion and what it allows you to do in terms of marketing and the reintroduction of products and so forth. So it feels like it would be kind of a uniquely strong growth here and the Street is not really modeling that. Again, I'm probably putting you on the spot in a way you can answer right now, but I'm just trying to get a sense for how quickly you realize you really can get up to that max capacity in those new plants?

I mean, Ken, you are putting me on the spot. I'm just kidding.

I know. I lied.

So, we have communicated that we expect production to be above 20%. However, remember that some of that production doesn't go -- you can't say that sales is going to be up 20%, because some of that is going to go into rebuilding our internal inventory. I think it's fair to say that, we would expect net sales to be high-end of our algo, and that's 10% to 12%. So I think the Street is pretty close. But you're right, I think that we do -- we have some -- we definitely have some momentum in the business, we are experiencing week-to-week -- record weeks without promotion, without marketing, and without our full portfolio. So, I think that we're excited to see the continued momentum as we bring on new capacity.

Thank you. And then my follow-up is, you talked about how in powders you won't take -- you'll have to promote back to sort of offset any kind of cost deflation. But not every producer can promote at the same time, there's limited shelf space for that. So, is it reasonable to think that you're not going to -- just to follow-up on a previous question, you're not necessarily going to take your price -- your net price down all the way, all the time, but just kind of heading that direction. I just wanted to get a sense of how people are -- or how you're thinking about that from a net perspective versus inflation or deflation?

Our general plan -- I mean Dymatize and now Premier Powder is a low household penetration brand. And so, we really want to invest in -- yes, we talked about promotion, but we want to invest in brand building. We think there's a ton of opportunity to get new consumers to try these products and continue that kind of main-streaming and that's going to be done mainly through brand marketing. So, we think there's a big opportunity as commodities come down to invest in the brands and see it in top-line and continue to bring new households into the category.

Okay. Thank you.

Thank you. One moment for our next question please. And our next question comes from the line of Matt Smith with Stifel.

Hi, good morning.

Good morning.

We've heard this morning about you're restarting of promotional and marketing activity later this year. And I'm curious, if inventory levels for retailers need to build in your fourth quarter ahead of planned events in the beginning of your '24, should we expect shipments to outpace consumption in the back half as retailers build back the additional flavors and perhaps build inventory ahead of distribution gains and promotional events?

Yeah, I'll take that one. So, from a -- shipments versus consumption, we do expect shipments to slightly outpace consumption, but not dramatically. And you mentioned the flavor relaunches. Those come in, it's not a big bang, it's more as retailers reset shelves. And so those go in over time, so it's not one big bang. From a promotional perspective, we do have some light promotional on shakes in the fourth quarter, but we really expect them to load in really in the same quarter and then can be consumed in the same quarter. So net-net, slight shipments above consumption in the second half as we do reload flavors, but it shouldn't be dramatically higher.

Okay. And then, just quickly as a follow-up. Club events have been significant volume driver in the past. Do you have visibility and confidence in your capacity that you have the ability to restart promotional events in the club channel beginning in your fiscal '24?

Yes, we factored in the volume that we expect to sell through with club events and overall events, promotional events within food and mass, and that's all within our forecast that we're adding capacity for.

Thank you for that. I'll pass it on.

Thanks.

Thank you. One moment please for our next question. And our next question comes from the line of Andrew Lazar with Barclays.

Great, thanks a lot. Good morning, everybody.

Good morning, Andrew.

I think the newer greenfields or dedicated co-pack facilities are being built on sort of larger footprints that I think allow for incremental lines to be added much more quickly than what was possible with some of the previous maybe more space constrained co-pack facilities. So I guess, I'm curious how many lines are being put into the new facilities? And I guess really what I'm getting at is, has that changed maybe recently, i.e, increased your option for more lines than you initially expected just given the -- obviously, the momentum and consumption trends in the business?

Yeah. So, currently in the two new facilities, you're exactly right. So the footprint, they're only -- so I'll use the post facility first. There is room for 10 lines, they're starting with four. That has always -- that has been the case since the beginning. I mean, they haven't produced a shake yet. So, starting with four. And then the timeline is about -- so think of, for a -- to have to build a new facility to find the land, et cetera, that timeline is around somewhere between two and three years. But now that we have our partners that have more space to grow, the timeline is about -- somewhere about 18 to 20 months with if you need to get like the full processor and fillers. So, we're already really talking about adding in -- we're talking '25 and '26 volume now with our partners. The second facility is a similar, so they added four lines. That was the same as what we planned in the future. But we're already talking about expansions with them as well.

Thanks for that. And then, with household penetration continuing to increase, I think you mentioned that the repeat rate has remained pretty steady. Would -- I guess, would we normally expect -- not necessarily in convenient nutrition specifically, but would we normally expect repeat rates to start to drop as you bring on more households that maybe your more casual users or less loyal users? And if that's right, we haven't -- as we have not seen that for Premier, if I have that right?

Yeah, absolutely. So, as you expand both distribution and household pen, it is very common to see repeat and buy rates fall. And that's because, you're -- yeah, you have your loyal base that are usually the higher consuming consumers. And then when you add, they kind of dip their toe in. So -- and yes, really encouraging on actually both of our brands, Premier Protein and Dymatize that as we're adding distribution and household penetration that we're holding very steady from a buy rate and repeat rate, and it just shows how loyal our consumers are.

Thank you.

Thanks.

Thank you. One moment please for our next question. And our next question comes from the line of Pamela Kaufman with Morgan Stanley.

Hi, good morning.

Good morning, Pamela.

Good morning. Can you talk about the improvement in your performance in the eCommerce channel and your strategy there for Premier? I think your comparisons for eCommerce get easier over the coming quarters. So should we expect to see accelerating growth there?

Yeah, eCommerce consumption absolutely improved this quarter. If you remember, we had a slower ramp-up for our bottle co-manufacturer, which is the format that we sell into eCommerce. And we now -- we're past that. Our bottle co-manufacturer is consistently producing. We have inventory. The last quarter, we had issues with our retailer, major eCom retailer, having enough inventory to really drive demand there. We are now seeing that that is getting better and we're seeing that in consumption. So you saw an improvement this quarter in eCom consumption, and yes, we should continue to see improvement kind of quarter-after-quarter.

Great, thanks. And then you mentioned that you expect lower input costs now in Q4. So, can you just comment on what your outlook is for gross margins for the back half of the year?

Sure. Yeah. So from a gross margin perspective, we would expect the second half to be at or slightly below the first half. Keeping in mind that in Q4 we do have some wide promotion that obviously is offset, and we are seeing some other inflationary costs, like I mentioned in packaging and some of other supply chain. But Q3 should be up modestly from Q2 and then Q4 should be up again from Q3, but second half largely in line with first half, maybe down slightly.

Thank you.

Thank you. One moment please for our next question. And our next question comes from the line of Robert Dickerson with Jefferies.

Great. Thank you so much. Darcy, just kind of general question, so I have -- kind of longer-term outlook, I think the target for gross margin is 32%, 34% and an EBITDA is 18% to 20% at least in the first half now and kind of what's going on EBITDA for the year, you're kind of there, right? And I realize there could be some incremental spending on promotions, maybe ramp marketing, but at the same time, you have like a nice production capacity tailwind. So just kind of trying to get a general perspective how you're thinking about the current business performance on the margin side relative to those longer-term targets, given you're kind of doing pretty well as is and you've still been somewhat capacity constrained?

Darcy, do you want me to start, or you're going to?

Yeah, why don't you start, Paul, with margin.

Yeah. So you're correct that really last year we were at the high end of our EBITDA margin algorithm and we're kind of in that same spot in '23. And I'll keep in mind though, the last two years, we have been -- we've potentially pulled back on marketing and promotion, so obviously as we go into '24, those will ramp back up at higher levels than we've seen over the last couple of years, but we've also weather obviously protein cost at historical high. So as we get into next year, really our thinking is that we're going to -- we want to keep investing in the top-line and so that should be more promotion and likely more marketing with perhaps gross margins ramping up a bit from this year. But net-net getting back to an EBITDA margin that is still -- I think, we're likely in the high side at the high half of the algorithm, so 19% plus. But that's still where we're targeting at the moment. But there is opportunity as you mentioned that perhaps we can sustain towards the higher side of that.

All right, thank you. That's it.

Thanks, Robert.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Matt McGinley with Needham & Company.

Thank you. I have a quick follow-up on the EBITDA guide. Your guidance implies that the margins in the back half will be down I think 150 to 200 bps year-over-year. You noted I think twice that the gross margins will be up sequentially in the third and fourth. Overall, do you expect that year-over-year pressure to be mostly realized in gross margin or in G&A in the back half?

It's more in G&A. We -- as we ramp up our A&P spend compared to last year, that's the primary driver versus last year in the second half.

That makes sense. And the second question was on with the decline in working capital investment around inventory that you noted, I think you should have a pretty good back half in terms of cash flow generation. What's the priority for capital return in the back half? Is it paying down the revolver balances or repurchasing stock? And does the strong stock performance and multiple expansion that you've had this year, change your priority in terms of how you think about the returning capital?

Yeah, as with the second half, we will prioritize debt paydown or pay down the revolver as you mentioned. But we continue to look at the long-term growth prospects of this business, we still feel are very strong. And so, we will continue to be opportunistic on share repurchases as we get into the second half, but first part will be debt pay down and then second half, share buybacks.

Thank you very much.

Thank you.

Thank you. One moment please. And our next question comes from the line of Bill Chappell with Truist.

Hey, good morning. This is Stephen Lengel on for Bill Chappell. Thank you for taking our question.

Good morning.

This would just be a quick one. I guess you called out some of the investments in systems to support the long-term growth around CapEx expectations. I guess, have those expectations changed over the past few months? Is there kind of anything you could call out there?

No. We've been assessing looking at our processes, looking at our systems, and so we went through an assessment process that identified some things we want to implement and change. It's not ERP, but it's some of the subsystems and support infrastructure of the business. And so as that became clear that what we are planning to do there, then we realize that some of that would be capital expenditure. And so that's what's really driving the increase. But we look at this, we have a very fast-growing business, and we want to make sure that we have the infrastructure and processes to support that growth not only now but for the next few years. And so we're investing now to make sure that, that is the case.

Great. Thank you, guys, so much.

One moment please for our next question. Our next question comes from the line of Jim Salera with Stephens.

Hi, guys. Thanks for taking my questions. Darcy, you mentioned that you guys are under-distributed in FDM. What would it take -- is that just a function of kind of the capacity constraints and not having all the SKUs that they want? What would it take to kind of get on par or back to a level that's kind of relatively the same to the other channels on FDM?

Yeah. So we believe that in -- I mean, so yes, it's -- short answer is it's a byproduct of our capacity constraints. But also just when you look at the potential, I mean, we should have -- if you look at some of our competitors, we have about even market share with one of our major competitors, and they have doubled the space we have. So, we know that the Premier Protein -- and I'm specifically talking about Premier Protein shakes. But we know we're under-distributed. We know that we drive new households into the category. And so, now getting those -- getting the capacity and then getting those products back on the shelf. I think it goes back to a prior question about when does that happen. And I think that we're getting some really encouraging news from the resets that the retailer calls that we're having and feedback on the shelf dynamics and what's changing in the shelf sets on resets and retailers are really leaning in and excited about the fact that we have capacity coming on, and they're definitely leaning into Premier Protein and Dymatize, which is exciting.

Okay. And as a follow-up, if we zoom out and you guys are obviously the leader in kind of that RTD shake category. What does it take to drive overall category awareness? I mean, you have kind of a core consumer that utilizes the product on a normal basis. But what does it take to pull in additional consumers that might not be familiar with kind of the use occasion or just the category more broadly speaking?

Yeah. It is basic stuff. It is getting back to -- I mean, so if you go back into -- in '21, fiscal '21, when the last time that we were really marketing, promoting and driving demand through new items, et cetera, we increased -- we helped -- we are bringing in new consumers into the category. We added about between 1 and 2 points of household penetration for our brand as well as the category. And so, we have a playbook on what -- how to kind of talk to those consumers that are outside of the category that are kind of open to ready-to-drink shakes and powders. And so it is linear -- it's TV, it's digital. It's that kind of the 360 marketing view of making sure we have shopper marketing as well as promotion and display. So, we have kind of a playbook that works for us. And now it's just about getting back to executing that playbook.

Okay. Great. Thanks, guys. I'll pass it on.

Thanks.

Thank you. One moment please for our next question. And our next question comes from the line of John Baumgartner with Mizuho.

Good morning. Thanks for the question.

Good morning, John.

Darcy, I wanted to ask about Dymatize. The momentum in eCommerce has been pretty strong for the last couple of years, but I've been surprised more recently at the pace of distribution growth in grocery and mass. For a brand that's traditionally had an audience that's more specialized, what are you seeing or what's evolving that's giving you confidence Dymatize has appeal in these outlets? And I don't know if it's just white space fill, but if not, it would seem to suggest a much longer runway for growth.

Yeah. I think this is one of the most exciting things about Dymatize and really kind of the make or break of it. It was either going to be a really steady niche product within the specialty side of the business or it was going to be a bigger, more mainstream sports nutrition brand that had relevance across not only specialty and eCommerce, but also FDM. And it has definitely proved to be the latter. And I think the support of that was its success in specifically mass. One major mass retailer, where we got distribution just about, I guess, it was about two, three years ago, it was successful. And I think that was the first time that was kind of the proof point that this brand, which is a super-premium sports nutrition powder brand for athletes in the know, it could sell in mass. And so, since then, I think we're continuing to expand distribution. I mean, you can see it in some of our supplemental charts. It's still low, but we're seeing really strong takeaway in -- well, really strong distribution TDP growth within food and mass, and we continue -- and we expect to continue to see that.

Okay. Thanks for that. And then just a follow-up...

Mr. Baumgartner, could you please press star, one, one again? Your line seems to have dropped. One moment, please.

Hello?

Your line is back open.

Great. Thank you. And then just to follow up, Darcy. I asked last quarter about the change in data providers, the Numerator, and it was a bit more time under your belt now. Can we sort of revisit that in terms of just grasp with some of the nuances, any learnings or a surprise that you can kind of integrate into the plan going forward? Thank you.

Yeah, for sure. So, we've continued to -- yeah, if you remember last quarter, it was brand new. We now have about three to four months under our belt. And it's great. I think that our -- we're definitely able to kind of dig in to get a consumer understanding more. We're understanding purchasing patterns, media habits. And it's helping us in, I would say, two specific areas. One is just improved day-to-day management. We're able to forecast more effectively because we understand the interactions with competitors as well as kind of where our growth trajectory is just from a -- like lifts, et cetera. But I think more importantly and more -- and I think what excites me is just around our future thinking and planning more around brand strategy, media and communications planning as we get into planning for '24 and beyond. That's where I think the deep consumer insights that we're gleaning from that data is really helping us.

Thank you, Darcy.

Thanks.