BellRing Brands, Inc. (NYSE:BRBR) Q4 2022 Earnings Call Transcript

Darcy Davenport: Yeah. I think the way I look at, I mean, I talked about in my prepared remarks just that this last year was a transitional year. I mean in many ways, I mean, we were holding — we kind of were holding ground for a year and now we are getting back to driving demand. There’s — starting in 2023 and beyond because of capacity, we are going to be able to get back to driving demand, having a full set of flavors, driving through promotion and marketing, building households, doing — innovating and doing all the things that we were doing before. And I think what that’s going to do. I think we have proved that pricing power. But I think what’s important is, we want to get back to growth and we want to get back to bringing new — we still think that the category and our brand is highly underpenetrated.

And so, I think, as we get back to growth, we will start bringing in new households, some of it will be in promotion and some of it will be on every day. So I think that, that will be the focus going forward. And I see, I mean, the whole category really has been a little bit on hold even though we are still — the category is growing, but I am excited to see it get back to growth, because there’s so much more potential here.

David Palmer: Thank you.

Darcy Davenport: Thanks.

Operator: We will take our next question from Ken Zaslow with Bank of Montreal.

Ken Zaslow: Hi. Good morning, everyone.

Darcy Davenport: Good morning, Ken.

Paul Rode: Good morning.

Ken Zaslow: Do you ever think that you need to rethink your business model in terms of potentially getting a closer relationship or something with the, obviously, that you wouldn’t want to actually do the manufacturing. But is there something that you can do, because this obviously isn’t the first time you have had supply issues going back to the IPO, we have gone through this a couple of times. Is there a thought of just taking a step back and saying, all right, there’s a better way to look this model?

Darcy Davenport: Yeah. In many ways, I think we have pivoted our strategy. As we — I mean, if you look at several years ago, we were simply a co-man, we had simply a co-man model and every single one of our co-man had multiple different competitors in the same co-man. Now let’s see, two of our three that are coming on next year are exclusive to us. They are dedicated to us. So, yes, they are still — and what I think is a — it’s really kind of an elegant solution, because it allows us to stay with our asset-light model, but allows us also to have a dedicated facility or two dedicated facilities, which actually will make it three, because we have one already. But — and so that — and so we will have kind of more influence, more transparency, and then I also talked about before about right of first refusal on new assets. So in many ways, I think, our manufacturing strategy has evolved, given as we have learned from the past couple capacity constraints.

Ken Zaslow: Okay. My second question is, have you segmented your customers in a way that you would know what percentage are the ones that are seeking value and is there an opportunity to just continue to minimize that and not even worry about that as they probably profit — may not be profit dilutive, but they are less accretive than the others? And is there — because it doesn’t seem like demand is your challenge, right? So if you push all your capacity towards those consumers willing to pay and have a higher, is there an opportunity there to do something like that?