Welcome to BellRing Brands' First Quarter 2021 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 1876009. At this time, all participants have been placed in a listen-only mode. It is now my pleasure to turn the floor over to Jennifer Meyer, Investor Relations of BellRing Brands, for introductions. You may begin. Good morning, and thank you for joining us today for BellRing Brands' first quarter fiscal 2021 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. Afterwards we'll have a brief question and answer session. The press release and supplemental slide presentation that supports these remarks are posted on our website in both the Investor Relations and the SEC filings sections 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. 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 this morning. Last evening, we reported our first quarter results, as well as posted a supplemental presentation to our website. The presentation provides more insight into our business, consumption, and key metrics. I'm pleased to report that our fiscal 2021 is off to a good start, with net sales of $282 million and Adjusted EBITDA of $61 million, slightly above our internal estimates. Net sales were up 16%, with Premier Protein and Dymatize both growing double digits. As you saw in our press release, we affirmed our sales and Adjusted EBITDA guidance for the full year. The quarterly cadence is largely as expected, with some minor tweaks. First, we slightly overperformed both sales and Adjusted EBITDA in the first quarter, mainly due to a shift in sales from the second quarter. Second, inflation ramped up in the middle of the first quarter. We've done a good job with our cost out strategy and have been able to offset a portion of these headwinds. Given the expected surge in freight and additional milk protein inflation, we announced a modest price increase in our shake business starting in Q3. We will experience continued margin pressure in Q2 until the price increase is implemented, but we are confident in our full-year guidance. Turning to our category, brand highlights, and growth strategies. The overall convenient nutrition category remains stable. Growth in liquids and powders accelerated this quarter and are running above pre-COVID growth rates. The adult and everyday nutrition segments are driving this growth as consumers are increasingly focused on their general health. Most of the increased penetration is coming from everyday nutrition, while growth in adult is primarily the same consumers buying more. Powders are also seeing some strong momentum resulting from increased at-home consumption. Premier Protein shake consumption grew meaningfully this quarter, up 28% across tracked and untracked channels. Growth was broad-based and accelerated in nearly all channels when compared to prior quarter and year ago. Healthy velocities, strong distribution gains, and incremental promotions drove this growth. Food and e-commerce channels led the way, up 69% and 121%, respectively. This strong momentum has continued in Q2, with our first four weeks showing 17% growth across tracked and untracked channels, with impressive gains in food, mass, and e-commerce. We continue to make great progress against our growth strategies. Premier Protein's household penetration reached 7%, an increase of 19% over prior year. Our distribution continues to build, with brand TDPs up 17% sequentially, reflecting our Q1 shelf gains. In January, we kicked off our national marketing campaign, which includes TV, digital, and social media. We complemented our proven strategy of having real fans explain why they love our shakes with spots focused on our key differentiator, amazing taste. In the first few weeks of the campaign, our results are encouraging, with search and website traffic exceeding the same period last year. Our new flavors and pack sizes are driving significant growth. Café Latte, now in its second year, and Cinnamon Roll, our newest flavor, are performing in the top 15% of the category where sold. Our upsizing initiative is off to a great start, with our new 12-count driving almost three-quarters of our growth in the mass channel. Premier is also growing outside of shakes, with powders up 129%, driven by distribution and velocity. Dymatize had another strong quarter, up 35% domestically, with growth across all key channels. Distribution in FDM grew 38% since prior quarter, with strong product expansion in the mass channels. Our new ISO100 products, Fruity Pebbles and Cocoa Pebbles, continue to be standouts, driving velocity across all channels and securing significant new distribution. Our international sales were flat year-over-year. Premier Shakes in Canada showed meaningful increases, but softness across the rest of the portfolio offset this growth. The impact of COVID on the global specialty channel continues to affect the Dymatize and PowerBar brands. However, we expect this to slowly recover later this year. I want to take a moment to discuss a business realignment we executed this quarter, which impacts both Dymatize and our international business. Over the last several years, there has become more overlap between Premier Protein and Dymatize in the U.S. As a result, we decided to combine the management of these two brands housed in Emeryville. As part of the realignment, we created a dedicated international team who will drive growth across all of our brands outside the U.S. Regrettably, these changes result in reductions across our workforce in Dallas and Germany. I believe this was a needed strategic step to position BellRing for the future, but these decisions are not made lightly, and I want to thank our employees for all the hard work and dedication over the past years. Overall, I remain confident in our 2021 outlook. Our supply chain performance is strong, and our shake co-man network is well-positioned to support our growth. Our new creative is now running, and our messaging is reaching more households. Our distribution gains are driving meaningful growth, and we are seeing strong brand blocks across most major retailers. Our new products are succeeding in market, and our innovation pipeline is building, driving long-term value for the brand. I continue to be energized by our long runway for growth and now believe we have optimized our organizational structure to truly drive those growth strategies. I will now turn the call over to Paul. Thanks, Darcy, good morning, everyone. Net sales for the quarter were $282.4 million, up 15.7%. Adjusted EBITDA was $60.7 million, up 3.6%, and EBITDA margin was 21.5%. Premier Protein net sales increased 17.4%, driven by RTD shakes. First quarter results benefited from distribution gains for both existing and new products and incremental promotional activity. Dymatize net sales grew 16.2% this quarter, driven by distribution gains in club and mass and continued double-digit growth in e-commerce. International sales for Dymatize improved sequentially but remained weak on a year-over-year basis as a result of COVID. Net sales of all other products decreased 11.2%. Turning back to consolidated results, gross profit of $91.9 million increased 0.7% this quarter, with gross profit margin declining 490 basis points to 32.5%. The margin decline was largely as expected and related to higher input costs, primarily milk-based proteins and freight, as well as incremental promotional activity. SG&A expenses were $38.3 million, and as a percentage of net sales, climbed 140 basis points to 13.6%. SG&A expenses in the current year included $4.6 million in restructuring and facility closure costs related to our business realignment that Darcy discussed earlier. These expenses were partially offset by $1.5 million of lower separation costs, both of which were treated as adjustments for non-GAAP measures. Excluding these items, SG&A was down approximately $1 million compared to prior year, and marketing spend was flat. Before reviewing our outlook, I would like to make a few comments on cash flow and liquidity. We had a strong first quarter for cash flow, generating $23 million from operations. At quarter end, we had $50.8 million of cash on hand and $150 million available under our revolver. As of December 31, net debt was $635 million, and net leverage was 3.2 x. Turning to our outlook, we continue to expect fiscal 2021 net sales of $1.07 billion-$1.12 billion and Adjusted EBITDA of $207 million-$217 million. As Darcy previewed, our quarterly pacing is largely tracking with our expectations. First half gross margins will be further pressured by higher freight costs before rebounding in the second half when our RTD shake pricing takes effect. For the second quarter, recall that we will lap the prior year COVID pantry loading benefit for Premier Protein, which is a headwind to our net sales and EBITDA growth, but a tailwind for our third quarter. Our promotional activity and advertising investments will peak in Q2, as expected. We remain confident in our full-year estimates and are pleased with the top-line performance and distribution wins for Premier Protein and Dymatize. With that, I would like to turn the call back over to the operator for questions. Thank you. At this time, I would like to inform everyone, if you would like to ask a question, please press star then the number 1 on your telephone keypad. If your question has been answered and you wish to remove yourself from the queue, press the pound key. We ask that while you pose your question that you please pick up your handset to allow optimal sound quality. Our first question comes from the line of Ken Goldman of JP Morgan. Hey, thank you, and I love the 11 minutes of prepared remarks. It's fantastic. Thank you for keeping it brief for everybody. I wanted to ask about the gross margin, which of course was down a significant amount this quarter for the third straight time. I get it, right. You're facing a spike in dairy and freight. You've been promoting some more in some channels. I'm just wondering, because I think investors, and we certainly are guilty of this, have been modeling in much stronger gross margins. What can you tell us specifically, is there any way you can quantify what your expectations are for that line for the next few quarters or just for the year? Just in the name of making sure that we don't get those negative surprises on that line item again. Sure, Ken. Good morning. I'll take that. Coming into the year, we expected our gross margins to decline versus last year because of, especially the first half was impacted more so by protein cost, and we expected to continue to make brand investments in promotional spending. We expected gross margins to decline versus last year. What has changed, obviously, is freight cost has increased, and so that's putting more pressure on our margins in the first half. While overall for the year, we expect our margins to be down versus last year, we now expect that our second half should be above last year's gross margins because of the price increase offsetting some of these costs. First half down, second half above last year. Keep in mind, our historical margins have been roughly around 34%, with a spike in 2019 because of the price increase we took at that point in time where they got a little bit above 34. Historically, we've been about around there, so we expect to get closer to that as we take the price increase going into next year. Great. That is very helpful. Thank you. My follow-up, I am curious what you experienced in terms of any pushback from your customers to the price announcement. I would assume not much, just given how transparent higher dairy and freight costs are and given how there is not much elasticity in the market right now. I just wanted to get any color I could from you on that. Thanks. Customers, as you guys know, customers never like a price increase. They absolutely understand why we're doing it. As you explained, they're seeing the same inflation as we are. They understand it. Remember, we took price two years ago, and everyone behaved very rationally. Customers reflected it at shelf. Elasticities were very close to our estimates. We expect the same this time. Our next question comes from the line of Andrew Lazar of Barclays. Good morning, everybody. Good morning. Hi. First off, I guess, with regard to Premier, I know price mix was down about 4.5% as a result of some of the incremental promotional activity. I mean, that, as you mentioned, was part of the pressure on gross margins. I guess could you discuss a little bit how you evaluate the trade-offs between incremental revenue generated versus the margin pressure and I guess more of the optics of what some might call perhaps lower quality growth or a reliance on promotion? I guess put another way, what gives you the confidence that the incremental promotional spend is and continues to be an effective use of funds? Our focus, as we have walked you guys through, is building household penetration. We continue to believe that that is the biggest driver of long-term value and growth for specifically Premier Protein. One of the strategies to increase household pen is raising marketing and promotion this year to drive that. We know that once we get trial on this brand, because of our repeat rates that are over 50%, we will have a loyal consumer. If you look at 2021 promos, they are actually very similar to 2020 except for we tested an incremental club promotion in Q1, which is what you're seeing in the numbers. Other than that, they're actually fairly consistent with. As you guys know, we have our bigger push in Q2 and Q4, and then we added the Q1 promotion as well. Great. Okay. Thank you for that. Then Paul, as you mentioned, heading into the first quarter, it was expected that pretty much all of the EBITDA growth in fiscal 2021 would occur in the second half. Obviously you had 3.5% growth that you realized in EBITDA in the first quarter, and obviously fiscal 2Q's anticipated to be down to, I guess, is 2Q anticipated to be down to basically offset this so that you still kind of have that same cadence of virtually all the EBITDA growth in the second half? Similarly on sales, I think it was expected sales in the first half would be up high single digit. Obviously, first quarter was up far greater than that. If it was to hold to the first half guidance that you initially gave on sales, that would imply a deceleration in sales to maybe -1% to +3% in the second quarter. Given you have so much momentum, I don't know if that still holds. Anyway, I'm just trying to put this in perspective, what you did in the first quarter based on what your initial first half guidance was, if you get my drift. I think I do. Our thinking on first half growth is still in line with our original expectation. I think Darcy touched on in her prepared remarks that we did see a little bit of a shift into Q1 versus Q2. Whenever you're loading these large promotions, sometimes they load a bit differently than you expect. What we believe we've seen is a bit of a pull in Q1, a little harder than expected. That obviously follows that in Q2. Then with the freight headwinds, obviously that puts some additional pressure on our second quarter as well. We really think our first half is largely intact. It's just a little bit of a shift between the first and second quarter. No concerns about the sequential revenue top line. Great. Thanks so much to you both. Thank you. Thank you. Our next question comes from the line of Brian Holland of D.A. Davidson. Yeah, thanks. Good morning. I wanted to probe that or just imply Q2 growth a little bit further. It sounds like, I guess that some of that pull in from Q2 is maybe related to that club promotion that you referenced. I'm just curious if there's anything, obviously there's something at the end of the quarter here when we start to lap the initial demand surge around COVID. Is that just something where you feel like you don't have enough visibility on, so why not just stick with the same cadence through the first half and see how that laps? Is there something else in one of these channels that we need to be mindful of? Again, you're accelerating in scanner through January, that ran concurrent with the promotion at Costco, so no cannibalization there. It seems like a lot of momentum going into that second half of March, anything that we should be mindful of, other than just maybe just trying to be mindful of the COVID comp? Certainly, as we're lapping last year, yeah, the COVID comp was a big tailwind for us in the second quarter of last year. I think we previously estimated that the high single-digit, it drove high single-digit growth for us last year that we're obviously lapping. That does obviously weigh on your growth rates from last year to this year. Regarding the business momentum, we do feel like it's still strong. There's nothing that I've seen or we've seen that would suggest that there's any reasons for concern. Everything we've seen from a revenue side has been tracking to our expectation, again, with just a bit of a shift from Q1 into Q2. I'm sorry, Paul, just to confirm that, you said high single digit contribution from sort of the COVID demand surge in Q2. That's how much that contributed? That's what it contributed to last year, so that'd be the headwind for this year. That's the flip between Q2 and Q3, where it's a headwind in Q2 and a tailwind for Q3. Understood. If I could just ask a big picture question. I think relative to three, six months ago, it feels like we'll be in something similar to the dynamic that's in place today as it pertains to consumer mobility, which obviously has been beneficial to the category and your business in particular. If we extrapolate that out further, there's forecasts out there that would suggest 2x the American workforce will be working from home in some form, five years from now versus pre-COVID. Darcy, I'm just wondering if you have done any work on that, any analysis, and if there's reason to kind of rethink the opportunity here, just given the relative convenience of shakes versus bars at home. Obviously when we look at the penetration growth and the repeat rates on your business in particular. I'm just curious if you have any insights at this point on that? We're incredibly excited about our momentum as a business because not only, yes, we have the negative of the mobility, but we have the positive of, I walked through the category, and liquids and powders are, in the last 13 weeks, are double the growth of the overall category. We're seeing the tailwinds of just general health and the sentiment of consumers of really being worried about their general health and what they can do personally to improve that. We've got that tailwind, and I think that's long-term. I think, obviously it got accelerated with the pandemic, but I think that will stay front and center for a while. Then you take that and then you layer on top the increase of mobility and that we are a convenience product. I think we look forward and see a lot of encouraging signs. Appreciate the color. Best of luck. Our next question comes from the line of Chris Growe of Stifel. Hi. Good morning. Good morning. Good morning. Good morning. I just had a question for you, if I could, first on, just to understand, maybe I can better understand the fact that this quarter had a promotional load in. As I look at the charts and the data, I guess I was a little stumped still on how, with consumption being up so strongly for Premier of 27.5% and obviously revenues and volume for that business being up less than that, just how that dynamic worked. Maybe more importantly, how much should come out of Q2 as a result of that load in that occurred in the first quarter? Yeah. I'll take the latter part of your question there. Our thinking is that we've seen maybe a 1%-2% pull forward from Q2 into Q1. That would be that part of your question. Yeah, our first quarter is typically a very heavy shipments to consumption quarter. All of the January promotions that are going on, a lot of them do load for us in the first quarter. There's a chart in our supplemental that obviously shows that dynamic, and it's fairly consistent with last year. It was up a bit maybe from last year, which is part of that pull forward we're talking about, but it's not meaningfully different from last year's pull-in. Yeah, I think what I would add is that in untracked, we had some ship-in volume in Q4 that we saw the consumption in Q1, which is the delta between the consumption and the shipments as well. Okay. Thank you for that. I meant to follow up on that, but I understand what you're saying. Just a quick second question would be, just to get a sense of how much the inflation outlook has changed for the year, and then can you give any color around the degree of the price increase you're taking, and maybe that'll help dimensionalize the increase in cost. Darcy, you want me to take the inflation piece. Sure Y eah. From an inflation perspective, the change from our original estimate, which is primarily freight, is that it'll be a 75-100 basis point drag on the year. That's the magnitude of the freight impact, which is ramped up really kind of late in our first quarter. From a pricing standpoint, just for competitive reasons, I'm not going to go into the exact price increase, but it's modest and similar to what we took two years ago. Okay. Just to be clear on that, Paul, that inflation, that's 75- 100 basis point drag on the gross margin. Is that the way that you were quantifying that? That is exactly right. Okay. Thanks so much for your time. Thank you. Our next question comes from the line of Tim Perz of Stephens Inc. Morning. Congrats on a nice quarter. Thank you. How should we expect you to approach marketing spend this year? I know you plan to advertise on TV for an additional three months this year. If you achieve your household penetration kind of ahead of time, would you be more inclined to drive margins by pulling back on marketing spend in the back half, or do you kind of plan to stick to that goal and pursue additional households this year? Yeah. We plan to continue with our plan from an advertising standpoint. Big picture is we believe we are under-penetrated. We know our marketing is working. We're seeing early results. First of all, it worked last year to drive household penetration. We made some changes just to optimize it this year. In early first three weeks, we see that it is more effective than even last year. We believe it is the right way to build long-term value for the business, and we think there's a lot of upside, so we're absolutely continuing on the path to spend to acquire new households. Okay. Thank you. Premier Protein household penetration was up about 18% year-over-year, but your consumption exceeded that. Can you just talk a little bit about what you're seeing from the buying rate among existing consumers and what's driving that higher? Yeah. Let's see if I'm going to get to your question. It's a combination of new households and buy rate. From a strategy standpoint, our goal this year was twofold: household penetration and buy rate. From a household penetration standpoint, we are increasing our marketing and our promotion, and then from a buy rate and coming out with new products, new flavors, et cetera. From a buy rate standpoint, we have our upsize initiative. Those combination is where you're seeing the increase of household pen, but then you see the buy rate as well. Okay. Thank you. I'll pass it along. Thank you. Our next question comes from the line of Bill Chappell of Truist Securities. Thanks. Good morning. Good morning. I just want to go back to just the freight issue and just trying to understand. I imagine you have some freight contracts where you don't see the immediate hit as freight costs rise. I guess trying to understand since it is, you said it creeped up late in the first quarter and it's immediately hitting you in the second quarter. What ways to prevent that from, if they creep up again in the second quarter, that you haven't priced enough for that as we go into the third quarter? Just trying to understand kind of what visibility you have on your freight rates and what kind of, in order to price so this doesn't happen again and again as we move through the year and things starting to open up? Sure. Yeah. We do have, obviously, some visibility into our freight costs through our providers. It really did move up quite a bit, and I think you've seen that, obviously, inflation with other companies as well, with COVID causing some shortages with drivers. The really long-term thinking is that that will continue on for a period of time. To your point, there obviously is always risk that it goes up and there's opportunity, sure, to come down. We feel like we've looked at the rest of the year and looked at it at this elevated level as we thought about the impact to our business for the rest of the year. Your thought is freight rates have peaked or you've priced for the potential peak. Is that fair? Yes. Expectation is GPS. Okay. Just follow up, just any color on channels? Is it safe to say club versus non-club performed at a similar rate? It did seem like you had more promotions and obviously more new product introductions in the club channel. Any color there would be helpful. Thanks. Yeah. Oh, sorry. No, go ahead. I was just going to clarify if you meant Premier or total BellRing, or both. Yeah, I meant Premier. Sorry. Yeah. Premier on track still for the quarter. Overall, our consumption was up 27.5%. It was led by on track. on track still was tracking ahead and driving the growth over track. up about 43% and track being up 15%. We continue to have really solid growth in e-commerce. We did have a promotion in e-commerce, which drove some of that, which again, was expected. We're seeing solid growth in on track club. I will say, I think some of the areas that I'm most excited about is our progress in food, specifically food and mass, and getting more products on the shelf and really getting that brand block, which is something that we haven't had before, and we're seeing it in market. Great. Thank you. Thanks. Thanks. Your next question comes from the line of Jason English of Goldman Sachs. Hey, good morning, folks. Good morning, Jason. Morning. I guess I've got two quick questions. Well, maybe not quick, the first one is how much of the growth in Dymatize is coming from these Pebbles extensions? Should we be looking at these as almost like a license in and out? Do you think there's reason to believe they could actually have durability? I don't have the exact number for Pebbles, but I'll separate out the domestic growth from a distribution and velocity standpoint. About 60% of the growth was coming from distribution and about 40% from velocity. A lot of that velocity is coming from Pebbles, and the excitement there. It's really coming across channels. We absolutely think it has durability. I think I've explained the consumer insight to this piece. It's not just about borrowed equity. It is steeped in solid consumer insight that basically says that the Dymatize consumer is starved of carbs and so basically hasn't eaten sugary cereals in a long time and love it. Because our product delivers so well on the Fruity Pebbles and Cocoa Pebbles experience, it really is kind of scratching that itch. That is a consumer insight that can be really built upon. Interesting. Second question. You've got a great organic growth story here, and I'm not asking you to muddy the waters, but I do recall when you guys were initially spinning out and standing this business up on a standalone basis, part of the rationale was to be able to have a high multiple business that could acquire other high multiple businesses, other growth assets. Where is M&A on your agenda today, and have you seen any opportunities perhaps open up during COVID? Yeah, I think you highlighted and described it well. We do believe, and we've communicated this, is that we are excited. The organic growth of specifically Premier, but also Dymatize, is our number 1 priority. We still think there's a ton of upside, and that really is our focus. Just to jump, historically we've talked more about Premier as being the driver of that, which it will be. I think the recent momentum on Dymatize really gets us excited about that growth story as well. That puts us in a situation where M&A is absolutely one of our growth strategy, but it becomes more of a nice to have as opposed to a need to have, which allows us to pick and choose and wait for the right opportunity as opposed to being forced to buy something because we're trying to hold up a growth rate. Makes sense. Thanks a lot. I'll pass it on. Thanks. Your next question comes from the line of Rob Dickerson of Jefferies. Great. Thank you so much. Darcy, yesterday, a larger food company, who doesn't really focus specifically on protein shakes, bars, powders, stated that it seemed like your discussions with retailers and what we've seen on the shelf, let's say, in the past 6 months, would suggest that maybe there's been a little bit more shelf allocated to shakes and powders, right? Just given the at-home consumption shift. Maybe there's a less attraction for the time being, at least, just to the more on-the-go bars. They stated, though, that also through those conversations with the retailers, that they would think that some of that would reverse back out. Maybe there's almost like a temporary mix adjustment, obviously, to cater to where demand is. I just thought I'd ask if that's what you're seeing too, if you agree with that, what your perspective is, and really would there be so much shift? It seems like your shift has been driven by good product and a distribution gain, increased TDPs, not all the COVID, was already planned. There's the other commentary that is the overlay of what's happening within the broader category, if we think about the mix between powders and shakes vis-a-vis bars. If that makes sense. Thanks. It does make sense. I agree with the fact that we're seeing some shift of shelf space from bars to RTDs and powders. I have not heard that that is a temporary change. I guess I look at it as, very simply, retailers keep items that are growing and are growing their category. As I just said, 80% of our growth is coming from outside of the category. We actually have very little growth that is coming from shifting among the category. We're one of the highest velocity products in the category. I haven't heard it and honestly, it doesn't worry me from a Premier standpoint or a Dymatize standpoint for that matter. Okay, great. I guess just quickly, obviously the focus right now is building the core, right? There's a long runway of growth still on the current product offerings or categories as you just stated. There's the new Premier cereal, right? We've seen the innovation already come out. We discussed earlier on the post call. Are you thinking already like, where can we take Premier? We have the plan in place, in terms of distribution strategy, and if with the right offerings, we just need to execute. Maybe there's a little bit more bandwidth, in terms of where you could take the category into other adjacencies or for now, is it just block and tackle on the core? Thanks. That's it. It's both. Absolutely the core, we still have a ton of upside within our categories, but innovation is a big driver for us. We've been investing both within R&D as well as within marketing and focusing on where this brand can go. I think cereal was a good test for us. We could see if the brand could travel outside to other categories and other heavily trafficked aisles. I think the early results are really positive. We look at that. We've always thought that we've talked about center of store. I think that this bodes well for that transition. Now it's just about what is the best strategy to go to center of store. Got it. All right, thank you. Thanks. Our next question comes from the line of Ken Zaslow of Bank of Montreal. Hey, good morning, everyone. Good morning. Morning. Two questions. One is, when you think about your shelf space gains, can you talk about how much shelf space you've gained, and how much do you think that's permanent? That's my first question. I'm forgetting the exact numbers in my prepared remarks, but we gained substantial shelf space both on Premier and on Dymatize this last quarter. We're pretty consistently gaining TDPs. TDPs are we communicated that we're under-shelved really. From a kind of market share versus share of shelf, we are still under-shelved, we still have room to grow. This Q1 was a really big move. We gained substantial. I think I mentioned this in the last call. We doubled our shelf size in a mass retailer. Coming up in the spring is the resets for some major food accounts. We will continue to see big distribution expansions within those accounts further expanding our brand block. Dymatize, we gained, I think 38% TDPs in FDM, which is a big push for us, and that was mainly due to a mass account. We're already seeing the velocities strong enough to hold that space and expand. Same thing on Dymatize, where we see these food accounts, which we're expecting to see some increase in Dymatize as well. My second question is, when I think about expanding the Premier brand, what consumer insight did you see that would want Premier to get into the cereal category, a category which I don't know if I could remember, but the probability of success of a new brand in cereal can't be more than 1%, right? What consumer insight do you have that would give you the confidence that extending Premier into cereal versus, I don't know, other categories would be the right foray for you to get into the center of the store? Just a thought there. Thanks. The first thing is that we know that Premier, as a brand, is consumed 60% of the time at breakfast. We also know that breakfast is an occasion where consumers don't usually get enough protein. They have bagels and donuts and muffins. We know, as the old saying goes, it's the most important meal of the day. That is, I think, the insight. The second piece is just a practical application, which I would just say is we also happen to have a sister company who makes cereal. It was a fairly easy test to see if our brand could travel. I think it's very much steeped in solid consumer insights, but also there's a practical element. Thank you very much. Thanks. Our next question comes from the line of Kaumil Gajrawala of Credit Suisse. Hi, everybody. Good morning, or I guess good afternoon. Can you talk a little bit about e-commerce, e-commerce capabilities and maybe a bit about how much it grew, but also just how it's evolving, what sort of capital you might be putting in or investments you're making to expand that side of your business? E-commerce is a big focus for us. Just to give you a sense of kind of history and where we are. In 2019, e-commerce represented 6% of our business. It now is at 10% of our business. We think that it could be 10%-15%. We've invested. What's interesting about e-commerce, what we've learned, is it is a great trial driver for us. We're actually seeing our household penetration grow and us gain trial through e-commerce. Sometimes actually then buy because our e-commerce product is a little bit more expensive than in other channels. Oftentimes, we'll see consumers enter in an e-commerce and then repeat in other channels. Just from a capability standpoint, we're expanding marketing dollars. We're actually looking at pursuing e-commerce only innovation. We've increased headcount. We have a general management kind of approach to e-commerce, where we have kind of sales, marketing, and operations working together because it is a different way to go to market. Interesting. Thank you. On the topic of the primary mission has been about increasing household penetration and your successes, of course, now being replicated to the best of their ability by others. We're also going into a time where pricing is necessary, maybe promotion mitigation is necessary, while competition is also increasing. How are you thinking about just the dynamic between those two? Are we in the growth curve of the industry where it's a bit of a real estate grab, or is this something that you feel like it's okay to cool the jets for a period of time and deal with the input costs and worry about some of this other stuff later? It's a great question. Last quarter, we came out and said that we would rather not take price. We wanted to drive top line. We felt like we were comfortable with the assumptions, the cost inflation assumptions that we had incorporated in our forecast to not take price. We also said that if those assumptions prove to be too low and the facts come up and they are higher than that, we would adjust our course. That's what happened. Freight is obviously increasing as well as we saw some increase of dairy protein. We decided to take price at the back half. We evaluated other areas like marketing, et cetera. We just felt like given our household penetration and given our experience and our long-term goals of talking to more consumers and our marketing is working, we didn't want to pull that back. I still believe that even though we're taking price, we still will increase household penetration, and we're going to be watching that closely. Thank you. Our next question comes from the line of John Baumgartner of Wells Fargo. Good morning. Thanks for the question. Good morning. Maybe first off, Darcy, back on the promotion front for Premier. In terms of total activity for 2021, how are you sort of balancing the degree of activity between straight price discounts for consumers relative to investments for in-store displays or any sort of push levers for the trade, and how does that balance differ relative to the past few years as the brand now grows penetration? Our philosophy, maybe it's not our philosophy. From a promotion standpoint, a few years ago, we used to only get TPRs from a trade perspective. Because we have tested, our brand is big enough, we've proved to retailers that actually we bring in more households when we're on display and we have quality merch. We are only doing quality merch. That has made all the difference in the world from an effectiveness standpoint. Hopefully, you guys have seen this, but in the New Year, New You, we had displays in most retailers, and large displays, sometimes multi-product displays. That is really important for us because we bring so many people from outside the category, that we need to get out of the aisle to get people's eyeballs. Once we do, we hold them, we get the repeat, and we grow the category for the long term. Let me see if I answered your question about promotion and the split. Yeah, absolutely. Right on point there. I guess a follow-up, just to come back to Dymatize, given that your comments this morning seem, I guess, pretty bullish as the new ISO products go from drawing board into the market. When you think about Premier exponentially surprising to the upside from the time it was acquired, I guess, back in 2013, how do you see the parallels evolving for Dymatize? I mean, just given what you're sort of learning real time about the brand and consumers, is there any reason why it couldn't evolve into a $500 million business over time? Are the ambitions sort of changing or growing to any extent there? Thank you. Yeah. We are very pleased with the momentum of Dymatize. I think what is encouraging is how it is taking in the mass. Not that long ago, this brand was a specialty-only product. The team has done a fantastic job of kind of repositioning it and changing and moving the channels to make it much more balanced. It's succeeding in e-commerce and again now mass. If I fast forward five years, I still believe Premier is going to be our big brand. I expect us to have more brands than just Premier and Dymatize. Premier will be the biggest brand just because it is the most mainstream brand, and I've talked about how we actually kind of source volume or appeal to all of the different consumers. Dymatize has a very solid place for athletes in sports nutrition. It has a very clear consumer. Yeah, I believe that it can be a much bigger brand, double the size that it is now, eventually. Well, I'm trying to spread the word at Gold's Gym, so trying to do my part for what it's worth. Thanks for your time. Thank you. Your next question comes from the line of David Palmer of Evercore ISI. Thanks. Good morning. This is a bit of a follow-up to Rob's question about retailers giving more merchandising and shelf at the expense of bars, and obviously that's a retailer decision, and I guess there's consumer ones behind that. I guess there's a thought that this is a convenience play, that bars are on-the-go type products and maybe the shakes are not as much, and this is a temporary thing, and as mobility returns, it gets better for bars. That could be one narrative. I suspect that's simplistic and there are other consumer needs, demands that are at play here that, because a ready-to-drink beverage is pretty convenient, too. Could you just talk about that, what you're seeing in terms of the interplay, and is it really one cannibalizing the other in your view? They really have different occasions. If you think of, shakes are, for the most part, 60% consumed in the morning. They're more likely to be used as a healthy meal replacement. Bars are much more snacking oriented, and they're much more on the go. I think there are a lot of consumer trends and macro trends that are fueling the RTD and the liquid side of things, as well as the powder side of things, that are tailwinds to bars, but not quite as much. Those are all around general health, immunity. Most RTDs have a vitamin and mineral blend. Those are very important to consumers. When you're talking about people are trying to increase their immunity, et cetera, that becomes important. As we go more into kind of proactive health, those naturally fall within RTDs. I think you're going to start seeing a bigger divide between RTDs and powders and bars, which have made their way much more into snacking. Got it. Thank you. Just a question on marketing and the message, both how you market and what messages you're going to play on. I'm wondering about the buzz creation type of stuff and how much of it is what you're trying to do in social media. I wonder, for example, did you have something to do with the users combining Premier Protein with Starbucks coffee, so that Proffee buzz that we saw out there over the last quarter or so? What you're doing from a digital messaging standpoint, the things you're pushing on from a message standpoint. Thanks. Yeah. We love the Proffee. What is so exciting about Premier is our consumers create the content. We don't ask them to. They just do it because there is so much excitement and love for this brand. What we do is once they create it, we fuel it. We then jump on it and give it more legs. Changes to strategies from an advertising standpoint, it's more tweaking than anything else, is we have TV, we have digital and social media. We are adding more dollars and more time to the budget. We're talking to more people. We are adding consumers with different types of messages. The beauty of, obviously, digital and social is that you can change the message slightly depending on who the audience is. We updated creative. I said this in my prepared remarks, is it's all been about our devoted fans really telling other people authentically why they consume the product. Now we're complementing those with what we call the first ones testimonials. We call the second ones taste-monials, which is really all about taste and hitting that how amazing our consumers believe the taste is and showing it in visuals. We're also supporting some of our new products with national media, which we've never done before. Those are some of the changes within our strategy and how we amplify the buzz that already happens from our consumers. Thank you. Thanks. Our next question comes from the line of Bryan Spillane of Bank of America. Hey, good morning. Just two quick ones for me. One is, I know you talked a lot about where the first quarter landed versus expectations and cadence for the year, but I think I might have missed this, but just where is consumption tracked relative to what your expectations were? Especially around Premier and given just the elevation in activity you've had, merchandising activity you've had, has that run ahead of what your expectations were? Consumption is pretty consistent with our expectation. I would say with one small change is we did, and I think I mentioned this maybe in some of the follow-ups of the last quarter, is we did see a small increase in November in some club stores when some of the additional lockdowns happened in several of the states, almost like a mini panic buy. What was interesting about it is it appears people bought more, but then they consumed more in the quarter, so we didn't see the decrease that we saw in last March. That was the only thing that was surprising from a consumption standpoint, is just a little bit of a panic buy in November. Okay, great. Thanks. Then just related to the price increase, should we factor in anything for customers maybe buying ahead of that price increase when it's effective? I guess trying to understand just whether or not there'll be any other disconnects between shipments and consumption related to the price increase. Yeah. That's going to happen. That will happen somewhat. If retailers put in three times the orders than normal, we will act on that and try to bring it down. I wouldn't necessarily model in a massive increase. I think that we have control over that. We did not have that happen two years ago, I think we have a process in place to address that. Oh, terrific. Okay. Thank you. Thank you. Ladies and gentlemen, we have reached the allotted time for questions and answers. We thank you for participating in BellRing Brands' first quarter 2021 earnings conference call and webcast. You may now disconnect your lines and have a wonderful day.