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BellRing Brands holds double-digit volumes on pricing reversal


BellRing Brands maintained its double-digit volume and sales momentum in the first quarter as the US protein business raised its outlook.

Volumes climbed 19% in the three months to 31 December, building on the fourth quarter’s 19.4% pace, as the Premier Protein shakes and powders brand owner signalled room to capture further market share on low household penetration rates.

The price/mix component turned negative to the tune of 0.3%, compared to a positive 5.2% in the final quarter of fiscal 2023. The metric was 15.4% in the opening quarter of that year, when volumes rose just 2.9%.

Volumes are expected to be supported going forward by price promotions and distribution gains. And on a cheery note for prices, the owner of the Dymatize protein powders and ready-to-drink beverages brand said it was starting to see an element of easing in some ingredients costs.

“Our better-than-expected first quarter performance, along with strong consumption trends and confidence in our capacity expansion, drove our decision to raise the top- and bottom-line,” president and CEO Darcy Davenport said as a new co-manufacturing plant for shakes comes on stream.

“Our business is focused on the strongest segments of a growing category with a tonne of upside. Premier Protein and Dymatize are leading mainstream brands with low household penetration and strong loyalty.”

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By GlobalData

First-quarter sales rose 18.7% to $430.4m, prompting publicly-listed BellRing Brands to raise its full-year outlook to a range of $1.87-$1.95bn, from the $1.83-$1.91bn presented in November.

Similarly, the guidance for non-GAAP adjusted EBITDA, which increased 18.4% to $100.5m in the quarter, was lifted to $375-$400m. The company had previously steered the print to $360-$390m.

“We now expect net sales to grow between 12% and 17% over fiscal 2023 and adjusted EBITDA to grow between 11% and 18%,” Davenport told analysts this week, adding that production is expected to increase in excess of 20% this year with the Michael Foods plant on board.

Sales for the Premier Protein brand rose 18.9%, with volume up 19.5% and price/mix down 0.6%.

For Dymatize, it was a case of plus 20.9% and 32.4%, respectively, for sales and volumes and a steeper 11.5% decline in price/mix.

John Baumgartner, a managing director at Japanese investment bank Mizuho Securities, wrote in a research note that BellRing Brands’ “momentum” was “intact”.

He said: “FQ-1 reinforced our view that more capacity and strong retail demand augurs upside to FY-24 despite hard comps; model shifting to volume-based growth from price-based growth and category volume consumption [are] solid.”

CFO Paul Rode suggested BellRing Brands’ gross margin should be supported in the second quarter by “lower protein costs, offset partially by increased promotional spend and other input-cost inflation”.

The margin rose 80 basis points in the first quarter to 34.4%, with gross profit up 21.5% at $148m.

“We expect more protein favourability in the first half, and then that starts to moderate as we go into the second half. We’ve seen some puts and takes within the protein complex of some were up and some were down,” Rode said.

Davenport explained BellRing Brands is behind more “mature CPG companies”, which tend to have household penetration rates in the 80%-plus area, compared to 45% to 69% across its own range.

She repeated comments made in November that the company expects to benefit from the rise of the GLP-1 weight-loss drugs in the US.

“We think that there’s a tonne of room to grow within just adding people given all the macro trends that are going on around protein is good for you, healthy eating and convenience,” she said.

“And not even to mention everything going on with GLPs. So we think there’s a tonne of tailwinds from more people leaning into the category and we’re positioned well.”


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