Good day, thank you for standing by. Welcome to BellRing Brands' Third Quarter 2023 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. Please be advised that today's conference is being recorded. It is now my pleasure to introduce Jennifer Meyer of Investor Relations, BellRing. Good morning, thank you for joining us today for BellRing Brands' Third 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 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. Thank you all for joining us. Last evening, we reported our third quarter results and posted a supplemental presentation to our website. I'm pleased to share our Q3 results were above our expectations. Net sales grew 20% over prior year. Adjusted EBITDA was up 8%. The momentum in the business is palpable as we restart demand drivers on shakes. This quarter, we brought new capacity online, which allowed us to relaunch our temporarily discontinued shake flavors and expand our successful limited time offer program. Consumer and retailer excitement around these new flavors is incredible. Both Premier Protein and Dymatize powder businesses are also proving to be strong growth engines, with both brands expanding distribution and responding well to media. You saw last night we raised our outlook for the year. We now expect net sales to grow between 19% and 22% over fiscal 2022, with adjusted EBITDA to grow between 22% and 25%. Our better-than-expected Q3 performance drove our decision to raise our full-year guide. We are proud of the progress that we made this year. While certainly not finished with our planning process, our initial expectations for next year are to deliver at the high side of our long-term algorithm in both net sales growth and adjusted EBITDA margin. As a reminder, our algorithm and net sales growth is net sales growth of between 10% and 12%, with EBITDA margins of between 18%-20%. We will provide more details on our fiscal 2024 outlook in November. Turning to Q3, let's start with shake production. Our production growth over fiscal 2022 continues to track in line with our expectations, with year-to-date production at low double digits. I'm happy to share that we brought a new co-man SunOpta online during Q3. They represent one of our two greenfield facilities in our shake capacity expansion plan, and they had a smooth startup. They continue to scale up and will be a small contributor to our Q4, but a much larger contributor to fiscal 2024 and beyond. Our second greenfield facility, Michael Foods, is expected to start up in Q1. While a slight delay, we remain on track to add north of 20% incremental capacity next year. This allows us to rebuild our internal safety stock and deliver robust growth in 2024 and beyond. Now to the category and brand updates. The convenient nutrition category grew 14% in Q3 as tailwinds around health and wellness and fitness continued to drive growth. Consumer interest in functional beverages and sports nutrition products continues to be high. Ready-to-drink growth led the category up 21%, and ready-to-mix grew 16%. Increased supply is lifting ready-to-drink growth, while increased promotion, marketing, and distribution are boosting both segments. Moving forward, we expect to see continued strong volume growth, but pricing to be a smaller contributor. Premier Protein shake consumption accelerated this quarter, up 27%. Growth was terrific across all channels, driven by improved supply and flavor expansion. The highest growth was in mass and e-commerce, as both benefited from our full range of flavors and higher in-stock levels. Our summer limited time offering, Root Beer Float, was available outside of e-commerce for the first time and demonstrated an impressive 90% incrementality to the brand. In July, shake consumption continued to grow, up 21%, demonstrating continued strength. Our brand metrics this quarter reflect our building momentum. Premier Protein RTD market share reached 20%, our highest-ever quarterly share. I'm also happy to report that shake TDPs have returned to growth, surpassing our previous high in late fiscal 2021. Recall last quarter, Premier Protein became the number one brand in the RTD segment and the number one brand in the broader convenient nutrition category. The brand stayed in the top spot throughout the quarter. All of this is especially encouraging because we still haven't restarted meaningful marketing and promotion. Premier Protein made great progress in household penetration this quarter, with the brand adding nearly one percentage point versus Q2, reaching 15% of households. Our household penetration continues to be the highest in the category, we expect our Q4 marketing and promotional activities to further grow household penetration. Our repeat and buy rates are holding steady, demonstrating our consumer loyalty. The Premier Protein brand is proving it can travel to other forms and categories. Premier Powders consumption was up 85% behind new distribution and strong velocities. In the same way that Premier mainstreamed the RTD category, we believe the brand can do the same within the powder category. In addition, we are seeing early success with our licensing strategy in both cereal and frozen pancakes. Although not a significant revenue driver, we're encouraged that the brand can be successful in other high traffic aisles. Turning to Dymatize. The brand had another strong quarter, with consumption dollars up 39%. We saw double-digit growth in nearly all channels, driven by distribution gains, promotion, and marketing. The brand's strength continued into July. Dymatize's success with mainstream consumers continues. This fiscal year marks the first time the brand has meaningfully invested in broader media, and the strategy is working. Base velocities on our flagship line, ISO100, are up 30% versus the pre-media period. Market share, TDPs, and household penetration reached new highs this quarter, with a ton of upside still in our future. Encouragingly, as Dymatize adds new households and distribution points, repeat and buy rates are holding steady. In closing, I'm delighted with our year-to-date progress. We are on track to deliver results ahead of our guide last November. We are accelerating and gaining momentum in almost every part of our business. Our first shake greenfield facility is now up and running, bringing us closer to realizing a step change in our shake production run rate. Premier Protein maintains the number one share position in our growing on-trend convenient nutrition category. We have begun to drive demand by relaunching our full assortment of flavors. Both Premier Protein and Dymatize are delighting mainstream consumers and reaching all-time highs in market share. Much of this momentum has come without major marketing and promotion. Looking forward, we can't wait to bring the Premier Protein and Dymatize brands to more consumers and help grow the category with our retail partners. We look forward to providing more specifics around fiscal 24 next quarter. Thank you for your continued support, I'll now turn the call over to Paul. Thanks, Darcy. Good morning, everyone. As Darcy highlighted, our third quarter performance was modestly above our expectations. Net sales for the quarter were $446 million, adjusted EBITDA was $87 million. Net sales grew 20% over prior year, adjusted EBITDA increased 8%, with adjusted EBITDA margin of 19.5%. Starting with brand performance, Premier Protein net sales grew 20%, with growth split evenly across volume and pricing. Volume grew 10%, benefiting from increased shake production compared to a year ago, the relaunch of temporarily discontinued flavors, and strong growth from Premier Powders. As a reminder, we have fully lapped the April 2022 price increase for RTD shakes and will continue to benefit from the October 2022 price increase through the end of fiscal 2023. Shake consumption dollars grew 27%, outpacing shipment growth 19%, as last year's April price increase was not fully reflected at retail until later in the third quarter. Shipment growth was modestly impacted by the lapping of a trade inventory build in the prior year. Dymatize net sales were up 32% this quarter, with volumes growing 46%. Strong volume growth was driven by distribution gains, organic growth, and promotional activity. Volumes benefited from the lapping of an easier prior year comparable, driven by price elasticities and lower shipments of non-core products resulting from supply constraints. Price mix was a 14% headwind to Dymatize's growth rate in Q3, driven by higher trade promotional activity and unfavorable product mix. Gross profit of $136 million grew 13%, with a decrease in gross profit margin to 30.5%. The margin decline resulted from higher input costs and trade promotion. This was partially mitigated by pricing actions and favorable freight rates. Gross profit in the quarter also included a $2 million unrealized mark-to-market adjustment on our commodity hedges, which was a 40 basis point headwind to our gross profit margin. Excluding one-time costs in the prior year period, SG&A expenses as a percentage of net sales increased 30 basis points. The increase was driven by a 130 basis point increase in our marketing spend, primarily on our powder business, partially offset by leverage on the remainder of our G&A base. Before reviewing our outlook, I would like to make a few comments on cash flow and liquidity. I'm pleased to share that we generated $110 million in cash flow from operations in the third quarter and $131 million year to date. As expected, net working capital decreased significantly from the second quarter, with reductions in both raw material and Dymatize finished goods inventory. During the quarter, we repaid $60 million against our revolving credit facility. As of June 30, net debt was $893 million, and net leverage was 2.8x. With our EBITDA growth and continued strong cash generation expected in Q4, we anticipate net leverage to be approximately 2.5x by the end of fiscal 2023. With respect to our share repurchases this quarter, we bought 1.3 million shares at an average price of $36.13 per share or $49 million in total. Our remaining share repurchase authorization is $31 million. Turning to our outlook, we raised our fiscal 2023 guidance range for net sales to be $1.63 billion-$1.67 billion and adjusted EBITDA of $330 million-$338 million. The updated guidance reflects our better-than-expected third quarter results, while our outlook for the fourth quarter remains largely unchanged. In Q4, we expect Premier Protein net sales to grow double digits, with volume a larger contributor to the net sales growth rate than pricing as we restart light promotions and ship fall resets. Similar to Q3, the reintroduction of our temporarily discontinued flavors and higher RTP production will also drive year-over-year volume growth. Dymatize faces a tough comparable in Q4 as we lap the impact of high international and specialty shipments in the prior year. We expect fourth quarter adjusted EBITDA margins to be down slightly compared to prior years. Our higher SG&A as a percentage of net sales is partially offset by higher gross margins. Gross margins are expected to benefit from lower protein costs, offset partially by increased promotional spend and other input cost inflation. In closing, we are pleased with our year-to-date performance. Our momentum continues to grow, and we are well positioned to close out the year. I will now turn it over to the operator for questions. Thank you. As a reminder, to ask a question, you will need to press star one, one on your telephone. If your question has been answered or you wish to remove yourself from the queue, press star one, one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Andrew Lazar with Barclays. Good morning, Paul and Darcy. Good morning. Good morning. First off, you know, as you've seen, we, we've all seen some, some center store food categories start to slow pretty meaningfully as pricing is lapped and, and sort of volumes have remained pressured. Even private label is showing lower volume at this point. Your categories obviously have remained, you know, very resilient in the face of all this. I was hoping to get a bit of a better sense of sort of what your consumers are telling you, and, you know, if you've seen any change in, in behavior, and I guess why you think the, the ready-to-drink shake and powder, you know, categories thus far at least have held up as well as they have? Yeah, I think it's the, it's the macro trends. I mean, I think that all of the areas that are boosting, think of everything coming out of, of kind of COVID. These macro trends were here before COVID, but they were just accelerated. Think of, you know, the obesity epidemic. You think of more people, you know, more people get after COVID, who gained weight during that period of time and who are now trying to exercise more. Just in general, the health and wellness trend. All of those things which were coming in just were accelerated during the COVID period of time, and that's what I think we're seeing. I mean, in general, volumes are, are solid in the category. We're starting to see in from an RTD standpoint, the categories being boosted by better, y ou know, the capacity constraints are easing within the RTD, and that's, you know, partially because of us. Pricing is still up, but moderating. From a specifically on powders, sports nutrition is this idea that many of the sports nutrition brands are successfully transitioning into mainstream channels. That strategy is working, and it's just bringing more households into the category. I expect this to absolutely continue. These are big macro societal trends, you know, we expect the pricing to come down, but volume to continue to be to grow steadily. Got it. Thanks. Then, you know, given the, the very strong momentum in the business, I'm curious if you've yet optioned for more lines to be built at your two new greenfield facilities beyond the, the four lines I think that each is, is starting with, such that you're, you know, thinking about capacity for 2025 and 2026, not to get too far ahead of, ahead of ourselves. Yeah, I'm gonna probably talk a little more in generalities here, but we are absolutely, we're now planning three to five years out. We are actively talking to our partners, for 2026 and, you know, 2025, 2026 and 2027. We are building out our long-range plan, and absolutely, we're talking about expansions. Got it. Thanks so much. Thank you. Thank you. One moment, please, for our next question. Our next question comes from the line of Ken Goldman with JPMorgan. Hi, good morning. Thank you. Darcy, I was curious, you know, I, I, with the understanding that you're not ready to go into full details on 2024 yet, just the commentary or the reiteration of, sales to be, growth to be sort of at the higher end of your algo next year. You did talk about rebuilding some safety stock within that. The, the commentary really is for 20%+ capacity to be added. So I just wanted to get a sense of what that plus really is, how much safety stock is gonna be built, and really, what your actual production growth will be next year, if there's any way to kind of think about all of those, you know, given that it's a little early, maybe? Yeah, I think we're giving ourselves some flexibility with the 28% plus, the main reason is because, remember, you know, we just started up SunOpta. It is going well, but they aren't at their, you know, it, it takes somewhere between 2 and 2.75 quarters to really fully ramp up and to get to the levels that we are expecting. There's still a ways to go. Then we haven't produced a single shake at MFI. I think that we are giving ourselves some kind of latitude in that 20% plus. I feel good about that number, but I also don't feel confident enough to give any more above that number. Then just your question about inventory build. Yeah, I mean, we've talked about the, the kind of delta between, call it 20% production and the high side of our algo, that difference. We have to rebuild. We only have about four weeks of, of safety stock right now. We are at the bare minimum to operate our business right now. it's hard on our organization, and we basically have to be, you know, really, really good at forecasting, specifically at the different sizes, and at all the different facilities. it's difficult. we need to our ideal safety stock is at 8 weeks. we have to build and anywhere between, you know, anything's better than four. 6-8 is really the ideal, eight being perfect. We're going to, next year, plan on building inventory so we can operate effectively. Got it. Thank you for that. Just quickly, and I'll, you know, risk it again by asking about 2024, but, you know, one of the questions that, that we've received lately is: Is it reasonable to expect that all in, BellRing, will have, you know, potentially negative pricing next year? Not that it's necessarily a bad thing, right? It's because whey and nonfat dry milk are down so much. Last I checked, the Street was kind of modeling flattish. You talked about Dymatize pricing being down. Just curious if that's a reasonable assumption, and if there's any early read on, you know, how we kind of think about that from a percentage basis? Paul, do you want to answer that? Absolutely. Yeah, from a shake perspective, you know, we, we are expecting to get to more of a normalized promotional year. That would obviously drive some unfavorable pricing, so we would expect some pricing headwinds on our shake business. I think it's a fair assumption that, you know, short of us taking any further pricing on shakes, that, you know, promotion would, would drive that down slightly. On Dymatize, I think it's still a TBD. I do think that, you know, there could be some incremental promotional activity, and to your point, the magnitude of those, of the protein there is, it is coming down, you know, faster. I think it's a little bit of a TBD of how the market reacts to, to the Dymatize and the powders. Can I just ask a quick follow-up on that? I know we're limited to two questions, but last quarter, I thought, Darcy, you were suggesting that Dymatize was more of a pass-through. I'm just curious why it's more of a TBD now? Maybe I misheard last quarter. Yeah, I don't, I don't believe we said it's a pass-through. I think what we've said in the past is that historically, what the powder category is how it's acted with protein costs going up or down as it adjusts promotion up or down. Mm-hmm. I think the question in this particular case is the magnitude is just greater, so does that still play, you know. I think that's the question, but it's not a pass-through. Got it. Great. Thank you for that. Thank you. One moment, please, for our next question. Our next question comes from the line of Bryan Spillane with Bank of America. Thanks, operator. Good morning, everyone. Morning. Morning. Hi, I just I have a question about the long-term EBITDA margin algorithm. I guess, you know, thinking a little bit about just how different maybe the business is today versus what it was when you, when you originally set that. You know, like, how should we think about, I guess, you know, whether that's the right range? I guess what I was thinking is, the channel mix is changing, right? You know, less club, more mass and food. Your supply chain is, is changed, right? You've got, you know, a wider network of co-mans. You know, Dymatize, I guess, you know, a little bit of a bigger part of the mix than it was when you originally set that. I f you could just kind of talk about the puts and takes there, and I guess, as you're looking out over, Darcy, as you said, you're doing kind of multiyear planning now, just, just, you know, is, is 18 to 20 still the right algorithm? Could it maybe be, be different than that? again, just relative to EBITDA margins. Thanks. Sure. I'll, I'll start, Darcy, feel free to jump in. Yeah, you're, you are correct that if you look at, you know, the last, you know, if you look kind of our recent history, we have been on the higher side of our algorithm, the midpoint of our guidance this year would suggest we're at the top end of the long-term, you know, EBITDA algorithm of 18% to 20%. You know, we still feel like that's the right range. We do believe that over time, we could get some additional scale benefits. You mentioned some of the channel mix shifting. The, the shift really between powder and RTDs isn't really dramatically different. The margin structure there is relatively similar. You also have to look at this year as an example. We're not spending heavy on promotion, we're not heavy, you know, spending on marketing. So those things typically will ramp up and, and will chip away at our, at our margins a bit. Yeah, I agree, I agree. Over the long term, we still feel like 18%-20%. We've said we want to be in the top half of that. Then if we see that we can continue to be at the top end of that, then perhaps it should be, you know, adjusted upward a bit, but we still feel comfortable with our, our algorithm today. Yeah, I would just add all the things. I mean, you described the changes of the business, and they absolutely are true, but just to reiterate what Paul mentioned, from a channel mix standpoint and a product mix standpoint, the margins are pretty close, so that change, it's more about just the scale, and we absolutely do get some scale benefits, but not as much as some other businesses with our co-man model. I think where we get scale benefits are, you know, things like G&A, et cetera. We do get some from kind of procurement, et cetera, and we'll get some from the network, so that will move. Also, I think we wanna keep our... I mean, this is a branded business, and we are we're bringing in new households into the category, and that takes marketing, and we want to continue to build these brands to keep the loyalty up. And so that's why I think, again, I think we're being a little bit, a little conservative by keeping the algorithm where it is, because remember, we haven't started marketing and promotion again on our biggest business. We wanna get kind of a year under our belt, and then we'll reassess. Okay, thanks. Then just a quick follow-up. Now that the supply chain is, again, is, is, is, you know, expanding the way it is and, and more diversified, Darcy, does it give you any more. How much flexibility does it provide in terms of either product formulation changes and/or packaging, you know, you know, to the extent that you might think about different pack types for, for shakes? Does this really change at all the type of flexibility you have in terms of, you know, product, formulations, innovation, and also just more flexibility on, on maybe different types of packaging, if, if that's, you know, kind of what the market is, is looking for down the road? Okay. The expansion of our network, yet we have. We've expanded the lines of 330 mL, so that's the size of our main 30 gram shake. We've also added a bottle co-man, that absolutely does expand our ability, and we can have different sizes of bottles. There are a ton of different packaging options within Tetras, and, you know, many of our co-mans do have different capabilities, our focus has been really around expanding the size. From an innovation standpoint, I see us doing more innovation of the liquid inside the same size Tetra. It's a great size of Tetra. If you look across the competitive set, it's kind of the standard. I see us doing a fair amount of innovation around the liquid. We will be looking at some packaging, but I think it's more likely that we'll be, we'll be innovating more around the liquid as opposed to, the, the packaging. Okay. Thanks, Darcy. Mm-hmm. Thank you. One please, for our next question. Our next question comes from the line of Jim Salera with Stephens. Hi, good morning, guys. Thanks for taking our question. Darcy, I think first of all, you talked about, you know, the powder buyer for Premier and the opportunity to take that brand outside of ready to drink shake and kind of expand that. When you see the powder buyer, is that an existing RTD shake buyer, and they're just expanding their overall buy with the brand, or are they largely incremental to the brand? Mostly an incremental. It's a different occasion. The Think of the RTD consumer, the occasion is primarily a breakfast replacement and powder is primarily, well, used as a true protein supplement. Think of it as a lot of times after working out, but also as a supplement to other things. Smoothies or you know, putting protein powder in pancakes, et cetera. It's a pretty different occasion. There's some overlap with consumers, so it would either be an incremental occasion, but more likely it actually is an incremental consumer. Okay, great. Then on the marketing side, as you guys ramp your marketing spend, is the primary message communicating use occasions and really introducing the consumer that isn't aware that this is a breakfast replacement, you know, that it's not something you take after working out? Is that the primary messaging, or is it more Premier specific versus, you know, other peers that are already in the ready-to-drink shake category? Our whole marketing strategy is around, and we've been using this strategy since the beginning of the brand, as it started with word of mouth, is using our own loyal consumers to tell other, other people why they love the product so much, how they use it, why it's different, how it's worked for them, and it has been very successful. It's very authentic. So they're talking about the fantastic flavors, they're talking about the incredible taste, they're talking about how it changed their lives. Yes, how they use it as well, but it's really, it is about Premier Protein, and it is not necessarily about just ready-to-drink shakes. This is about how Premier Protein is different and how it changed their lives. Okay, thanks. I'll hop back in the queue. Thank you. Thank you. One moment, please, for our next question. Our next question comes from the line of Matt McGinley with Needham & Company. Thank you. Your, your updated guidance for the year implies some healthy growth in EBITDA in the fourth quarter, even at the high and low end, it only points to about 40 basis points of margin compression compared to the 230 basis points that you, you had this quarter. Is that improvement driven more by favorable input prices, or was the promo on marketing in the third quarter just unusually high with the, the flavors you relaunched, and, and some of that doesn't repeat in the fourth quarter? It's primarily on the, the protein cost stepping down from the, from the high. Q3 was really the peak of protein cost, in particular on the milk proteins, and then we expect them to step down in the fourth quarter versus the third quarter. That is the primary driver. We have a little bit less promotion in, in the powder business, but we also ramp up promotion a little bit on the shake business. Net-net, it's mostly protein. Got it. On the supply chain expansion, I have probably more of a tactical question, but will you be relaunching or launching additional flavors with that supply chain expansion that as it comes online, or are you good with where you need to be with flavors right now, and this, this next expansion is really more about having the capacity to grow for the next few years? Yes and yes. Flavors, flavors continue to bring in excitement and new people into the brand. I mean, you saw it. Really, the big thing we added this quarter was the 3 discontinued, the temporarily discontinued flavors, as well as our LTO expansion of Root Beer Float. With that, you saw, you know, a bump up of almost 1 point of household pen. They work, they provide excitement. People get really sick of chocolate and vanilla, we see a long runway for flavors. I say, and yes because we're also looking at different formulas. Think of everything from anything to bring in either a new occasion or a new consumer. You know, think of, you know, different levels of protein, different types of protein, different, you know, formulations. All of that. We have a very active R&D team that is thinking of ideas to bring in to introduce Premier Protein to a broader set of consumers. Okay, great. Thank you very much. One moment, please, for our next question. Next question comes from the line of Jason English with Goldman Sachs. Hey, folks. Thanks for spotting me. Hey, Jason. Darcy, it's great to hear the, the comments around the brand affinity, not just the product affinity earlier. As we look into next year, and we, we look at what I think we'll all agree is, is a pretty, pretty sharp deflationary trend in input cost, I imagine you'll be throwing off a lot of excess gross profit. What are the plans in terms of marketing? Because you, you think about building a big beverage brand, you, you obviously think about a lot of marketing spend, which you don't have. Your marketing spend is actually quite low as a percentage of sales or in absolute dollar terms. Do you see an opportunity to meaningfully ramp that as we go into next year? And if so, how would you look to bring the brand to life? When or if, if, when or if ever, can we expect to see maybe some campaigns coming to life to, to illustrate how you're evolving a brand story, not just a product story? Thank you. Yeah, for sure. I'll, I'll answer the marketing question. Paul, if you wanna add anything else about the, the margins. This brand, you're right, we definitely have a lower% of marketing spend than I think, you know, other beverage brands. It's unique. It's a brand that because of our loyalty, our consumer loyalty, we are able to spend less. I'll explain why. Once we in 2021, when we actually did TV, we had it, we had a campaign, we also had digital, et cetera, we still we were able to put it out on the air, our social and influencer following, basically take that message and really organically get it out to all of their followers. It just has to do with how passionate our consumers are. I, I do not think we will ever need to spend at the levels of, you know, some of the big, big beverage brands. Now, having said that, we will increase our marketing. You know, we haven't for the last we've never really spent for we'll never spend really during Q1, but think of, you know, nine months. We've never, we've never spent at the, at the level I think that we should, for nine months, because when we have, you know, the, the increase was too steep, and we ran into capacity constraints. That will not happen. I think that we will, we will and if it does, I guess that's a good problem. I think that as we at toward the end of 2024, we're gonna ease into support in 2024. We'll start with promotion in Q2, and then we'll ease in marketing toward the back half of 2024. Think of kind of the, the very back half into 2025 is when you're gonna start seeing, you know, Q4 of 2024 is when you're gonna start seeing some major TV campaigns, digital support, where you're gonna see us really bring the brand to life. Okay. I think there was a-- you guys are going to weigh in on the margins as well? Oh, yeah, I can... Yeah, sorry. I can jump in, Jason. A couple of things to think about. You, you talked about 2024 margins, and there's a couple of things. You're right, protein costs, the commodities are coming down. We also have other, you know, things going the other way. We have some headwinds. We do have inflation on some of our other raw materials and manufacturing costs, that's partially offsetting that protein savings. Also, we expect to spend more on promotion in 2024. Depending on how we play the marketing versus promotion, that'll, you know, depend on with how gross margins play versus 2023, but those are the big drivers. As Darcy talked about, obviously, we expect to spend more on marketing. Net-net, we're calling for EBITDA margins to be at the high side of our algorithm for 2024, which, which would suggest a slight decline from where we are in 2023. Okay. Okay, thank you all. I'll pass it on. Thanks, Jason. Thank you. One moment, please, for our next question. Our next question comes from the line of David Palmer with Evercore ISI. Thanks. Good, good morning. I just wanted to get a sense from you, how would you characterize the competitive environment today versus maybe pre-COVID and post some of the changes we've seen in your competitive set recently, even since the spring, seen some shifts in some of the other player market shares below, what you're doing and your leading share, which is not, you're not giving up share, but we're seeing some share shifts below you. Are any of those challenger brands kinda making it more competitive, more discount-oriented, any ways that you see this competitive environment being reshaped? I think some of the competitive dynamics are that... I talked about, you know, obviously pricing went up. It's, it's starting to moderate, and I'm assuming you're talking about specifically RTD? Yeah, exactly. I'll just hit on some of the, the high-level dynamics. First, pricing, you know, pricing is still up, but moderating down. Capacity constraints are easing. In that way, they're, I think that we're starting to see, if you look at TDPs, for instance, for the last several quarters, we saw TDPs actually falling because of out-of-stocks, because of capacity constraints, and it wasn't, you know, it was a really across the board. You started to see in this quarter, TDPs up, so that's a good sign that kind of in-stock levels are coming up. What's nice about it, it's not because demand is falling, it's actually because there's more supply, which is nice to see. I think that their sports nutrition, the-- what's really growing the category is, are two areas, which is, if you think of the kind of four need states that we've talked about before, Adult Nutrition, Sports Nutrition, Weight Management, and Everyday Nutrition. Sports Nutrition and Everyday Nutrition are really boosting the category, and it is led by Sports Nutrition. That is very different from what we had seen before. During COVID, Adult Nutrition was really driving. What was interesting about it is, and that's kind of the ensures and the boosts of the world. What's interesting is they were growing, they weren't growing households, they were just growing by rate. What we're seeing now is that's going back to kind of historical levels, kind of low single-digit growth. What's really growing and exploding is Sports Nutrition and Everyday Nutrition. I think that goes back to some of the trends we were talking about at the very beginning of the call, which is just around, you know, more coming out of COVID, more people are trying to be more active, be, you know, get back to the gym, start their workout regimen, and it's boosting some of the brands within those, those categories. So I think in general, some of the challenger brands that you referenced, are, are growing for sure, and we're watching, but I would say that it has more to do with kind of the tailwinds of both the sports nutrition need state and the everyday nutrition need state. That's very helpful. Thanks. I'll pass it on. Thank you. One moment, please, for our next question. Our next question comes from the line of Jon Andersen with William Blair. Hey, good morning. Thank you for the questions. Two quick ones. I wanted to come back to your comments around innovation. One of the things we've observed is obviously in the powder category, you know, plant-based protein is a significant, I think, portion of that market, not so much in ready-to-drink shakes. I'd love to hear your perspective on, you know, why is this? Is it an issue achieving kind of the right flavor composition with the protein content? Is this changing when you're referring to kind of innovation of the liquid, would you kind of consider kind of that area and do some of your co-man relationships, perhaps help support this over time? Yeah, you're right. So powders-- plant-based is much bigger in the powder set than in the ready-to-drink, and it's really because of taste. With powders, you can cover up the taste. You can put it in a smoothie, and you can put a lot of fruit in it, and it'll taste like the fruit. That helps. With ready-to-drink, you can't hide behind anything. It is... It's difficult to make, you know, pea protein taste good. That is absolutely a lot of companies are working on that. Yes, there's expertise all over the place, you know, including co-mans, including protein suppliers, and obviously within the branded sets, we have a ton of experience here. I think that that will come, and it's just a matter of time. Okay, thanks. Then with respect to your, your supplying network and, and some of the, the additions that you mentioned earlier on the call, as you think about your longer range plans, you referred to kind of 2025, 2026, 2027. Particularly around those new greenfield facilities, is there capacity within those greenfield facilities for, you know, substantial line additions? In other words, as you think about kind of 2025-2027, do you see yourself growing with with those providers who have established greenfield facilities, or will it require, you know, new additions to the co-pack network? Thank you. Yes, the partners that we expanded with, we chose them because of their ability to scale. So just to give you some numbers, I'll use MFI as an example. They put in 4 lines. They have the ability to scale to 10. Yeah, and same, you know, SunOpta has the ability to scale. They have many phases that they're able to scale their, their facility. So absolutely, we have room to scale within those facilities, and, you know, in some of other, other partners as well, they're putting in new lines. The goal when we chose our partners was we do want, you know, kind of fewer, bigger, better, partners that are interested in really scaling with us, and so that was one of the, the requirements. Thank you. One moment, please, for our next question. Our next question comes from the line of Robert Dickerson with Jefferies. Great. Thanks so much. Darcy, just a quick question on the shelf resets, you spoke to, and then also you said, you know, volumes clearly would be, you know, growing nicely next year given the incremental capacity, and the product reintroductions. I'm just curious, like, you know, are the shelf resets kind of different than the incremental capacity? You know, is it incremental? Then do you just kind of have line of sight with your customers that as the capacity comes online and you can reintroduce the products that have been offline, that those just kind of go in on a rolling basis, you know, relative to having to then, like, wait for another reset? That's it. Thanks. Yes. As we... Our, our temporarily paused flavors, the three that we brought back, they will roll in as we have resets. I think what's interesting is there is a major mass customer that will be resetting in this in Q4. They didn't wanna wait for the reset, and so they decided to put up a display that had our those three paused flavors for several immediately when they were available, until, to kind of bridge the gap before the reset. That is pretty unique. Most don't have that flexibility, and so we need to wait for the resets. Far, we have those are available in kind of, I would say, I don't know, a third of the locations, and the rest of the kind of two-thirds will be rolling out in the fall and the spring resets. Got it. Okay. And then just to kind of, I guess, combine that with the commentary around kind of the timing of expected marketing spend, right, as you get through 2024. I mean, it sounds like, you know, as the products are reintroduced and they're coming online in the resets-... that, kind of maybe as we get through, like, the first half of the next fiscal year, kind of the primary focus is more on a little bit more kind of normal promotional activity with display, you know, trying to drive velocities relative to, you know, kind of pushing the consumer, with respect to, to, to marketing spend. Is that fair? Yeah, our plan, we have a, I think we've talked about this before in Q4, so next quarter, we have some very light promotions, and then we usually, you know, we don't promote in Q1, but if you think of then Q2 with the big time, we will layer on more normal New Year, New You promotion, in-store promotion, and then layer on marketing in kind of Q3, Q4 of next year. We don't feel like we need to do it all at the same time. We always have kind of a baseline of marketing activity on all of our social channels, and some small digital, some, you know, some digital spend. I think what you're talking about is similar to what Jason was asking about, is more of like the bigger campaign, and that would come later in 2024. Super. Thank you. Great. Thank you. Thank you. One moment, please, for our next question. Our next question comes from the line of John Baumgartner with Mizuho. Good morning. Thanks for the question. Hi, John. Darcy, first off, on the subject of household penetration for Premier, you mentioned it's the highest penetration in the category, but it's still only a fraction of the total category. When you think about where Premier is not present right now, how do you prioritize segmenting that opportunity? Do you have to hit on anything different to chip away at the next 5%-10% of households, and then different for the 5%-10%, like, after that? I mean, aside from just more marketing, more flavors, I guess, what, if anything, needs to evolve through the households from here? Yeah, great question. First, just hang on your first comment. Yes, highest in the category at 15%, but still only 15%. The overall liquid category is 43%. Nutrition bars, which are the part of the category that has already mainstreamed, that is at 55%, and then the overall convenient nutrition category is 73%. Just putting some numbers to your comment at the very beginning. We believe, we believe that we can double our household penetration, and we'll do it in a few ways. First of all, yes, we're the, the kind of normal playbook that we really haven't implemented yet. A normal playbook is flavors. You know, first it was just making sure that we have supply, clearing up our out of stocks, making sure we have full, full shelves. It was, you know, getting the flavors out there. It's increasing distribution where we already are distributed, and one of those places, e-commerce, we know that in our category, one of the channels that is really important for discovery, meaning that people go, and this is kind of obvious, but especially for our category, is that people go online and they, you know, research this type of product before they buy, and oftentimes they will buy online first. Big discovery channel, so really expanding our e-commerce presence and communication. We have a lot more room, again, where we already are distributed, specifically in food, drug, mass. We vastly under index. We think that we should have double the space in FDM. You start getting to... you know, getting back to marketing and expand and getting back to a brand campaign, where we really can focus on those new households that look like the ones that already are in our franchise but haven't tried. This idea of open to RTDs but haven't tried. We think that's a massive opportunity. We start getting to the areas that are maybe a little harder, but still very much an opportunity. Think of channel expansion. We've talked, you know, about convenience, food service, those are great for trial, and then you bring them into our, our franchise. Innovation is a big part as well. We have a, in our investor deck, we have, a household penetration bridge that goes through all of those pieces to get to double the size of our household pen. Okay, thanks for that. As a follow-up, in terms of promotion, the distribution of this category has changed a lot since the last material wave of input cost deflation. E-commerce is much larger, specialty is much smaller. You've got food and mass with more distribution. Has the shift in retailers, has that impacted at all, sort of the net focus from the trade on discounting? I mean, I'd imagine grocers are less inclined to use protein as a traffic driver than a GNC would be. Is it fair to think that on the downside of this commodity cycle, there's going to be less pressure to discount emanating from retailers relative to past cycles? It's an interesting question. We do see less. I guess I would answer it slightly... Okay, I think that there will be discounting. Based on our experience, you see less depth in kind of more mainstream distribution. Specialty, for instance, seems to go deeper on those promotions. I think the overall promotional frequency will probably be around the same, but I think the depth will be different, will be, will, will be less deep. Okay. Thanks, Darcy. Mm-hmm. Thank you. One moment, please, for our next question. Our next question comes from the line of Matt Smith with Stifel. Hi, good morning, Darcy. Good morning. I wanted to ask about the incrementality of the flavor extensions in your distribution gains. In the past, as you've reintroduced flavors, they've been very incremental, spurring additional consumption. I was wondering if you're still seeing that level of incrementality. I, I know it's, it's very high right now, but relative to when the flavors were reintroduced after the last supply shortage, given the larger size of the FDM channel compared to when to the prior reintroduction, and if there's any difference in consumer behavior there, or perhaps if the competitive set is making a difference today with, with some stronger competitors accumulating some share below you and, and getting on their front foot in terms of capacity additions as well. Again, in my prepared remarks, I gave the incrementality of Root Beer Float. It was 90%. That just gives you a sense of the just excitement around the consumer excitement around flavors. I also mentioned the retailer excitement around, you know, the one major mass customer that couldn't wait for the reset, and they wanted to put it on display for several months. There is definitely excitement around these new flavors. It is very difficult to assess true incrementality on the new on the kind of paused flavors. It's just because, I mean, we're getting growth from so from just filling out the shelves. It's hard to distinguish what is coming from... I mean, we're putting the, the new flavors on the shelf, and they're selling, and we're growing, and it's incremental, but is that, I think it takes more time. I would love that question in a few quarters when we have more time under our belt and we have better data, that I can really give you a solid incremental, like, incrementality data point. Okay, thank you for that. I think that's fair. If I could ask a follow-up on your comment around innovation within the bottle and the liquid. How do you think about the incrementality hurdle for innovation, given how strong these, you know, the reintroduction of flavors is performing, and as you mentioned, Root Beer did very well? That, that would seem like there's a high bar there, even though, you know, incremental innovation beyond just flavors may ultimately unlock, you know, additional household penetration opportunity. Yeah, we, we have a couple, two kind of, streams of innovation. One is just continue to expand flavors on both brands. continues to be... This is more, this is both kind of LTOs, so Limited Time Offerings on, on Premier, but also in-line flavor expansion. Dymatize also has done, w e didn't talk about it as much, but our flavors have done very well on Dymatize as well. That's one kind of, line of innovation. The other line is really focusing around, you know, incremental consumers and occasions. There are some people that aren't interested in a 30 gram shake. It's too much protein. There are some people that are lactose intolerant. There are some people that, you know, t here, there is a, kind of fence. It's there's much more room to expand with our current lines, but then then we can go after completely new consumers, and that is kind of another line of innovation. We're going after both simultaneously, and the, and really it starts with just consumer insights and focusing on, truly incremental to what we currently have. Great. I appreciate the color, and I'll pass it on. Thank you. Ladies and gentlemen, that concludes today's conference call. Thank you for participating, and you may now disconnect.