BellRing Brands, Inc. (BRBR) on Q2 2021 Results - Earnings Call Transcript
Operator: Welcome to BellRing Brands Second 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 5885539. It is now my pleasure to turn the floor over to Jennifer Meyer, Investor Relations of BellRing Brands for introductions. You may begin.
Jennifer Meyer: Good morning and thank you for joining us today for BellRing Brands second 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 and afterwards, we will have a brief question-and-answer session. The press release and supplemental slide presentations 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. And finally, this call will discuss certain non-GAAP measures. For a reconciliation of these non-GAAP measures to the nearest GAAP measure, see our press release issued yesterday and posted on our website. With that, I will turn the call over to Darcy.
Darcy Davenport: Thanks, Jennifer and thank you all for joining us. Last evening, we reported our second quarter results and posted a supplemental presentation to our website. I am pleased to report that our results were strong, with net sales of $282 million and adjusted EBITDA of $42 million. Net sales were up 10% despite lapping a difficult comparable in the prior year driven by COVID pantry loading on the Premier Protein brand. Dymatize grew an impressive 29% this quarter, with strong results across channels and further benefiting from an easier international comparable. Our first half results, combined with continued top line momentum, give us confidence to raise our outlook for the year. We now expect net sales to be between $1.17 billion and $1.2 billion, equaling growth of 18% to 21% and exceeding our long-term algorithm of 10% to 12%. We are also raising our adjusted EBITDA guidance range to between $214 million and $220 million. We are excited about our sales momentum. However, we continue to experience cost pressure as inflation ramps up ahead of our expectations. Our price increase on shakes, which goes into effect in the third quarter, combined with our cost-out programs are largely offsetting the anticipated commodity and freight headwinds. On our powder business, we are expecting significant increases on whey protein and are pursuing opportunities to mitigate this additional margin pressure later this year and into next.
Paul Rode: Thanks, Darcy and good morning everyone. Net sales for the quarter were $282.1 million, up 9.6%. Adjusted EBITDA was $42.2 million, down 2.8% and EBITDA margin was 15.0%. As Darcy indicated, our strong second quarter results were against a tough prior year comparable as we lap COVID-related pantry loading. Premier Protein net sales increased 8.2%, primarily driven by RTD shakes. Second quarter results benefited from distribution gains from both existing and new products and incremental promotional activity. Premier Protein net sales also benefited from strong growth in powder products and a favorable customer mix driven by increased FDM sales. Dymatize net sales grew 28.8% this quarter driven by distribution gains in club and mass and continued strong e-commerce growth. Favorable product and customer mix were also a benefit to net sales growth. Dymatize’s international sales showed year-over-year growth as we begin to lap the COVID-related declines in the prior year. Turning back to consolidated results, gross profit of $87.0 million decreased 1.4% this quarter, with an expected decrease in gross profit margin to 30.8%. As we have previously discussed, this decline results from higher input cost, freight and planned incremental promotional activity. SG&A expenses were $48.2 million and as a percentage of net sales declined 130 basis points to 17.1%. SG&A expenses in the current year included $0.7 million of restructuring and facility closure costs related to our business realignment. These expenses were partially offset by $0.3 million of lower separation costs, both of which were treated as adjustments for non-GAAP measures. Excluding these items, SG&A was flat compared to prior year despite $2.2 million of higher marketing spend reflecting expected leverage of our SG&A base.
Operator: The first question will come from the line of Ken Goldman with JPMorgan.
Ken Goldman: Hi, thank you. I just wanted to understand a little bit of the guidance. I thought you had been saying earlier that the pricing is largely offsetting the commodities and the freight inflation. But then I thought I heard at the very end, you are saying that the inflation was higher than you thought and it will hurt your gross margin. So, is the pricing higher as well? I just wanted to think about the balance of that as we model the gross margin out here?
Paul Rode: Yes, sure, Ken. I’ll take that. Since our February call, inflation has increased more than we expected, primarily in the second half. The second quarter was right on track from a margin perspective of what we expected. But the second half has increased and it’s inflation really across several fronts. It’s not one thing that’s individually significant, but they add up. We have seen some increase on whey proteins and our milk proteins as well, to a lesser degree, freight. So, our price increase is offsetting the inflation in the second half. It’s just the inflation is a bit more than we anticipated last quarter. So that is weighing on our margins in the second half.
Ken Goldman: Okay. And then I know there have been some concerns or just questions really about weight loss season potentially coming in a bit lighter than in prior years. I understand it’s not always easy to tell why a consumer is purchasing a product, but is it your understanding that weight loss went well or did that come – did that season gets shifted a little bit into your third quarter? I just wanted to get a little bit of sense for how you are seeing that?
Darcy Davenport: Our Q2, you know what we kind of term as new year, new you, which I think is what you are saying kind of weight loss season. We did really well. So in the category, it just – it really – it’s dependent on what form and I think it was depressed by the on-the-go. So for instance, liquids and powders did very well while bars did not do very well and that was really because bars are more heavily weighted on the on-the-go occasion. So overall, I think when you look at the category this last quarter in liquids and powders, everything needs to be increased with the exception of weight. And so adult was up, sports nutrition was up, everyday nutrition was up, which is really the area that Premier plays and Dymatize is in sports. Weight was down. And then when you look across the overall convenient nutrition category, both liquids and powders were up and bars was down. So I do think that the people who are – there is no doubt that the pandemic has added weight to people. I do think that it will come back. But I think what drives the convenient nutrition category is much bigger than just weight management.
Ken Goldman: Understood very much. Thank you.
Darcy Davenport: Thanks, Ken.
Operator: The next question will come from the line of Andrew Lazar with Barclays.
Andrew Lazar: Good morning, everybody.
Darcy Davenport: Good morning.
Andrew Lazar: Darcy, with – I think it’s about 15 flavors now available, household penetration, right, reaching 7.4% and obviously the significant distribution gains you mentioned in some of the previously less developed channels. I guess the question starts to shift a little bit towards how much run-rate is sort of left in these things? And is there one of those particular drivers that is most important among those that I listed going forward? How do you think about that, the room that’s left to go? I think I know your answer, but I want to get a sense of how you are thinking about it.
Darcy Davenport: I think you probably know my answer. The upside is still immense. And just – we always look at household penetration being the biggest driver. And household penetration, yes, is at 7.4%. The liquids category is at 24%. The overall convenient nutrition category is around 50%. So there is so much upside just in household penetration. And what’s nice is the tactics that we are driving, so our advertising, the promotional activity as well as just the distribution in new channels, that is what’s really – it is driving household penetration as we have seen by the rises. But from a distribution standpoint, you are right we have launched a lot of new flavors. Our flavor strategy and our upsizing initiative is absolutely working. But just to give you a sense of our space and the upside, so we have an average in tracked channels of about 7.5 items on shelf. One of our competitors, which has about an equal market share as us, they have 13 items on the shelf. So, that just gives you – we have incredibly productive SKUs. And so even though our distribution is up 55% versus year ago, the upside potential is still very large.
Andrew Lazar: Thank you for that. And then Paul just a quick follow-up, in terms of visibility for the rest of this year in terms of your cost, in terms of what can be sort of locked in and what you have a sense of – do you have a pretty good handle on or what your maybe forward coverage might be for those things that you can cover? Trying to get a sense of how much movement can now change or not with respect to your cost outlook at least for this fiscal year?
Paul Rode: Yes. At this point in the year, we have a pretty good handle on the protein side. Freight isn’t quite as long, but again, for the most part, at this point in time, we feel pretty comfortable with our coverage and understanding of the margin structure in the second half.
Andrew Lazar: Thank you.
Operator: The next question will come from the line of Chris Growe with Stifel.
Chris Growe: Hi, good morning.
Darcy Davenport: Good morning.
Chris Growe: I just had a question for you on the revenue growth guidance, you had a little beat of expectations in the second quarter, but obviously, your second half is going up pretty significantly. You are seeing a nice significant increase, it seems like in April. I just want to get a sense of as you think about that guidance and you did talk about, I think sequential improvements through the remainder of the year. But how much of that incremental revenue growth expectation you have is that 3Q or is it really kind of split across 3Q and 4Q, just trying to get a sense of that?
Darcy Davenport: Yes. It’s split across 3Q and 4Q. So remember, Q3 of 2020 had the pretty big trough following COVID. So, just if – just to give you a sense if we did exactly – if we – if our results were exactly the same sales as H1, that would already be a 16% increase. And what we have on top of that is organic growth, more distribution. We have incremental promotion in the second half and some incremental advertising. So, that gives you a – so hopefully it gets you comfortable with our build of why we are seeing the 24% to 30% growth in the back half.
Chris Growe: That’s helpful. Thank you, guys. And I had one other question, I think for Paul, but just a bit of a follow-on to the inflation question. So, could you characterize the rate of inflation in the second half of the year versus the first half of the year? I know the first half had quite a bit of inflation. Is the second half kind of caught up to where the first half is? I realize you have pricing coming through. I’m just trying to get a sense of how that shifts from first half to second half.
Paul Rode: Yes. The second half, based on our revised guidance, we definitely have – we’re expecting higher both milk and whey protein cost in the second half versus the first half. And so it is up year-over-year more than we anticipated previously. On the milk side, it’s relatively small on a percentage basis, low single-digit inflation. So it’s not a major change. On whey proteins, which is the primary ingredient in our powders, we’re seeing much more significant increases on those that aren’t really as impactful for us this year. We do expect some impact on our fourth quarter. It’s more for as we get into fiscal ‘22, the inflation on our whey powder business is more concern.
Chris Growe: Okay. So you call it – it seems like the second half rate of inflation below that of the first half. Would that be a fair characterization, and again, realizing you have some pricing coming through?
Paul Rode: Yes. The rate of inflation, you’re correct, is at a lower rate, but it’s still a headwind.
Chris Growe: Yes, sure. Okay, thanks so much for that.
Operator: Thank you. The next question comes from the line of David Palmer with Evercore ISI.
David Palmer: Thanks. Good morning. Just wanted to get a sense of the level of – and perhaps the year-over-year increase in marketing and promotion spending the quarter and sort of how you see that playing out through the year. What I’m thinking about is you had big plans in 2020, and COVID happened. So I’m wondering if there is some leftover business and perhaps even some pivoting that you’re making about how you think the consumer will be behaving coming out of COVID. So any color there would be helpful?
Darcy Davenport: Yes. So our – yes, go ahead.
Paul Rode: I can take the numbers and then do you want to give the qualitative. So you’d asked second quarter marketing was up about $2 million versus last year. Our first half marketing spend was around 4% of net sales. As we look at the second half, we expect to continue to invest as a percent of net sales in a similar high 3s to 4% range as we’re really seeing the marketing be effective. And then I’ll turn over to Darcy for additional color.
Darcy Davenport: And yes, just from a strategy and a pivoting standpoint, the advertising is working. I think the change – slight change of strategy that we made this year versus last year is I think I’ve talked to you guys about our taste – our testimonials, which we’ve long used our devoted fans to tell other consumers why they love the product. We will continue to use that. What we have augmented it with is what we call tastetimonials, which is really focusing on one of the things that really differentiates the Premier Protein brand, which is amazing taste. And we have added commercial, post digital and analog about our new – the flavors. So we have one on Café Latte. We have one on caramel, and they are really performing. So we actually are seeing the velocities on both of those flavors far exceed the rest of the line. So that has been a very positive move. It really has nothing to do with COVID. It has more to do with just what we are getting better and better at knowing what drives our business.
David Palmer: Just a comment and maybe you can comment on the comment, it seems like your – you almost let the functionality of your product and how consumers use your product, whether it’s about immunity or meal replacement protein speaking or the weight management aspects of that, you’ll let that not be part of your message almost on purpose. Is that how you’re playing it? And do you think – to your point, do you think the net effect of those need states will be positive going forward, i.e. the immunity dropping off will be more than outweighed by people looking for weight management in the future. How are you thinking about that?
Darcy Davenport: You’re absolutely right. What is unique about Premier is that it appeals to so many different occasions, so many different need states. So we allow consumers to fit it into their life. I mean, if you look at our campaign, too good to be good. There is no prescription as to how they should use it. So absolutely, you nailed it. On the second question, we still think immunity – so we are having – we’re putting an immunity claim. We changed our product, and that comes out later this summer. We still think health and wellness, immunity, this is going to be a trend. We don’t think it’s actually – even after people are completely vaccinated, we still think it is top of mind, and it will continue to drive this category. So we don’t think that’s going away. What I think will happen is that it’s going to be the people leaning into weight, it’s just going to be additive.
David Palmer: Thank you.
Operator: The next question will come from the line of Pamela Kaufman with Morgan Stanley.
Pamela Kaufman: Hi. Good morning.
Darcy Davenport: Good morning.
Pamela Kaufman: Can you comment on the split between the change in outlook for gross margin versus your operating expenses and driving the change in your EBITDA margin outlook for the year? Obviously, it seems like you’re facing more inflation than originally expected, but you also mentioned incremental marketing spend. So how should we think about the mix of the two driving your lower-margin outlook?
Paul Rode: Yes. Our lower margin outlook is primarily being driven by lower expectations on our gross margins because of the inflationary pressures on our – again, our key proteins and freight. We are spending a bit more on brand investments, but it’s not as much of an impact to our overall margins. We’re largely spending in line with our sales growth.
Pamela Kaufman: Okay, thanks. And then can you talk about how you expect to see your customer mix evolve over the coming quarters as you expand distribution in FDM? Does this have any implications on your margin profile as well? And what impact are you seeing in the club channel as you expand into FDM?
Darcy Davenport: I’ll hit the – I mean, overall – and Paul, you can add to this. Overall, our margins are pretty similar across our different businesses. So that really isn’t a factor. FDM is a little higher, but nothing dramatic. From our customer mix, our – clearly, we have a large club business. I think that what – as we expand into FDM, our growth in eCommerce, food and drug and mass is higher. And so that split will change. However, what’s interesting, and I think I’ve talked to you guys before about this is all of this works together. So as we – these other new channels, they – we have different sizes, but there are smaller pack sizes that are launched in these other – in these channels. And so, people are trying the product and being introduced to the product in food, drug, mass and e-commerce. And then often, they are then repeating in club. So really the kind of virtuous cycle work, one being more trial and then it feeds into the club channel. So overall, the pie just gets bigger.
Pamela Kaufman: Thank you. That’s helpful.
Darcy Davenport: Thanks.
Operator: The next question will come from the line of Bill Chappell with Truist Securities.
Bill Chappell: Thanks. Good morning. Just two kind of more follow-up questions. One, I am right in saying that most of the pricing you’re taking is list pricing. There is no real change your promotional calendar for the back half. Is that correct?
Paul Rode: Correct, yes. And going into the year, our promotional calendar was skewed towards the second half and specifically in the fourth quarter, and that’s unchanged.
Bill Chappell: Got it. So covering the incremental costs are just through the list price increase. It’s not any alterations there.
Paul Rode: Correct. And that’s on the – on our shake business, correct.
Bill Chappell: Got it. And then second, just maybe on a follow-up on the channels. Now that I think most of the planograms are reset, what kind of year was this in terms of shelf space gains, especially at FDM? But in general, how does that compare versus last year? And how does that set you up kind of going forward?
Darcy Davenport: We gained more shelf space this year than last year. So we’re up 55% in shelf space in tracked channel, so significant change. I think what’s exciting is we are seeing some customers – we’re pushing a 4-foot set, which – and where we have that 4-foot set within FDM, we’re seeing tremendous market share gains, which is a little bit obvious. But – and what’s also happening is it’s great for the category. So we’re able to sell that to – across FDM to our customers to really encourage them to expand the space because it will grow their category.
Bill Chappell: Great. Well, it’s fantastic. Thanks so much.
Darcy Davenport: Thank you.
Operator: The next question will come from the line of Kaumil Gajrawala with Credit Suisse.
Kaumil Gajrawala: Hey, everybody, good morning. The first question, Darcy, you opened with category growth is accelerating. You expect it to continue to accelerate. Is there – is this kind of acceleration or growth kind of according to plan or are you seeing something perhaps different from what your view might have been about the category a few years ago? We are hearing from a few other companies kind of demand rebounding a bit more quickly than anticipated. So is this kind of a year-over-year comp thing or is it something structurally seem to have shifted ?
Darcy Davenport: The category – we are seeing category growth above – I seen it’s slightly above historic rates. So just – we’ve historically seen the liquids category specifically about 5 – growth of about 5%. We are seeing it between 6% and 7%, so definitely higher than the past and slightly higher than our expectations, too.
Kaumil Gajrawala: Okay, great. And then any color or commentary on the price elasticity? Obviously, you’ve – given input costs, you need to take pricing once again. Can you just talk about what you’ve seen in the past, what you’re planning for this go around to give us a sense?
Darcy Davenport: Yes. So we talked about this that we took price in ‘19, and we – and the in-market elasticities were very similar to what we projected. So those are in our pricing increase this time is pretty similar to what we experienced or what we took in ‘19. So we’re expecting the same. I think that the upside here is that it assumes no other competitors take price. And given the far-reaching inflation affecting everyone, especially in proteins and freight, we do expect competitors to follow. If that’s the case, then obviously, our outlook will be conservative.
Kaumil Gajrawala: Okay, great. Thank you.
Darcy Davenport: Thanks.
Operator: The next question will come from the line of Rob Dickerson with Jefferies.
Rob Dickerson: Great. Thanks so much. Darcy, I heard you earlier comment that the innovation pipeline remains robust. So I just want to dig into that a little bit. Obviously, the mix of the business increasingly is going to shakes. Shakes are doing well. You’re obviously highlighting shakes, right? It seems as if kind of the bar business is just kind of gradually not as much of a focus, let’s say. So one, I don’t know if that’s correct; and then two, just when you think about innovation, are you speaking kind of more to other variations of the shakes, be it flavors, what have you or bigger picture the distribution works well and velocities work well in certain products and categories with the brand that you might extend or you could extend into other areas?
Darcy Davenport: Yes. Our focus is definitely on beverages, so both ready-to-drink and powders. We have pulled away from bars, at least domestically. We are still – we still have a pretty strong bar business in the EU. So we will continue that, but on the bulk of our business, you’re exactly right. We’re focused on beverages. Yes, our innovation pipeline, I am incredibly excited about. We have really leaned into this area organizationally, and I think it’s really paying off. So we’ve hired a new, what we call VP of Growth. We’ve added to our insights team. We’ve expanded our R&D team really to focus on ready-to-drink and powders, but really focusing on ready-to-drink because they are very complicated to develop. And when you look at the pipeline, I would – we still have a few new products that are coming out later this year. I talked about the immunity claim, but also this idea of expanding flavor. We – it is working. It’s working from a household penetration and a buy rate standpoint. So we’re going to continue that. I kind of put the pipeline into – it’s about flavor and function. And we will continue to bring news and excitement around flavor on both of our brands. But then we will also really elevate the function. And I think that’s – I think what I’m excited about is we’re exploring new benefit areas. We’re really encouraged by the results of Café Latte when we added the benefit of caffeine. It opened up new occasions to what has predominantly been a breakfast occasion. Now we’re seeing people drinking shakes in kind of that late afternoon. And so leveraging that success, we’re already thinking about other benefit areas that are potentially new to the category. But it will be likely in the beverage category. So it will be either ready-to-drink or powder.
Rob Dickerson: Okay, super. And then second question is just on the distribution gain plan, you had example earlier a competitor in the space that has excellent SKUs, and you have fewer SKUs, right? So if you’re, let’s say, bringing that new innovation to market and you look at the current retailers you’re in now, would you say that kind of the closer end push on potential distribution gain as we think for, call it, the next – or through ‘21 is more about getting the incremental shelf space for existing customers a bit more so than pushing into new customers and getting new distribution from there, so really just a new customer versus TDPs within preexisting customers? That’s it. Thanks so much.
Darcy Davenport: Yes, correct. We see the bigger opportunity. The bigger immediate opportunity is just more space in our existing customers. However, new channels is definitely a growth area. We’ve talked about recently, in the last year, we entered into the dollar channel. Well, that’s really – it’s doing very well, and again, it’s a great trial channel. We’ve talked about out-of-home kind of like the convenience and food service channels, which we really haven’t gone there yet, and that’s a big opportunity. So I would say short – the biggest immediate opportunity is definitely more space where we already are, but then we’re already laying the groundwork for the new channels as well.
Rob Dickerson: Alright, great. Thanks, Darcy.
Darcy Davenport: Thank you.
Operator: The next question comes from the line of Ken Zaslow with Bank of Montreal.
Ken Zaslow: Hey, good morning everyone.
Darcy Davenport: Good morning.
Paul Rode: Good morning.
Ken Zaslow: Can you talk about how your business case for Dymatize has changed? It seems like there is seemingly more opportunity there than maybe you initially thought years back just kind of parallel next to your initial comments back in the separation?
Darcy Davenport: Yes. Our strategy on Dymatize is around expanding the brand to mass channels is definitely working. Our focus around ISO100 as a flagship product line and really rallying all of the dedicated media around that line is also working. I think flavor excitement around these licenses, again, is bringing kind of new life. But I think, again, we figured out the recipe that works. And the – I think the old Dymatize of only being sold in the specialty channel was just too limited. The consumer is everywhere, and they shop across channels, so expanding it. The specialty channel is still very important to us and will continue to be. But we think there is a ton of opportunities that eCommerce is doing incredibly well, and then there is a lot of growth within that.
Ken Zaslow: With that as well as the performance in Premier, do you think that your 10% to 12% long-term growth algorithm is more of a floor than an actual algorithm going forward? It just seems like that 10% to 12% is seemingly more of a floor than anything else, given the change between the Dymatize business in the shelf space and the momentum there. And then I’ll leave it there. Thank you.
Darcy Davenport: I don’t think it’s a floor. I still think it’s a good long-term algorithm. We will – we’re still a new public company, and so we will continue to evaluate if that is the right algorithm. There is been a lot of noise since we went public, as you guys know. So just – but it has held. And this year, obviously, we’re exceeding it. We will continue to look and assess given our brand portfolio if it still move forward. And if we see that there is upside, we will update it.
Ken Zaslow: Great. Thank you, be well.
Darcy Davenport: Thanks, you too.
Operator: The next question will come from the line of Jason English with Goldman Sachs.
Jason English: Hey, good morning, folks. Thanks for the question. Appreciate it. And congrats on another good quarter. I guess I am going to play the other side of that question of whether or not – what the right durable growth rate is for the business. It sounds like a lot of your growth right now is coming from distribution expansion. And if we look at one channel where you’ve been present for a long time, the club channel, your business has slowed a lot. We’re down into low single-digit type growth. So can you give us for us a sense of what’s happening in the club channel? And then to play devil’s advocate, should we look at that as sort of the reference point of what sustainable growth is when the distribution tailwinds subside?
Darcy Davenport: Yes. It’s a great question. So this quarter, you’re absolutely right, club channel was low single digits. But it really is more of a factor about what it’s lapping. So last year, the COVID stock-up really affected club. It affected it early and more than the other channels. So we’re lapping it. If you actually look at April, the – our business is up 50% and very much in line with the rest of the business. I mean, obviously, it’s a law of big numbers. So – but we’re still driving growth, and we still see upside there because of our long-standing partnership with club and because we go to them with new innovation, just like the rest of our customers. But they are great partners, and we’ve really built the business there, and we still see – and I talked about earlier that the cycle where we – we get trials through these other channels and many move and repeat into club, we see that as a long-term driver and model for the business.
Jason English: Okay. That’s helpful. Thank you. And then on competitive dynamics in the liquid space, rewind the clock to the time you were coming public. There was obviously a lot of new brands coming in. Retailers were pushing or private label growth attracts competition always and forever. And you’re highlighting like the sustained very stellar growth there. Are we still in sort of proliferation mode in terms of competitors trying to come in and get a piece of this or have we begun to sort of shake out some of that and reconcentrate the category?
Darcy Davenport: I mean, you described it well. This is a high-growth category every – so we’re always going to be – there is always going to be a lot of competition, and there has been. We have seen a little bit of shakeout on the specific 30-gram competitors, which seemed to hit a height when we went public. Some of them have been discontinued, but there are some that will stay. I think the way we look at it is even through all of the competitive entries throughout the same – the last couple of years, we still have been able to grow double digits. So I hate the comment competition is good. But competition is not bad, especially when you’re talking about a category that has such low household penetration. It means that people are driving new households, they are spending, they are bringing new people to the category. And we think that we bring something different to the category. And so I think that – and then just on the private label comment, interesting enough, private label this quarter has seen some softness within liquid. They are actually down, and some of the private label retailers have seen some issues around quality and supply. And so I think their understanding that this product form is complicated, and it’s kind of what we’ve been touting for a long time.
Jason English: Makes sense. Thanks a lot. I will pass it on.
Darcy Davenport: Thank you.
Operator: And with that, we have reached our allotted time for questions. This does conclude today’s conference call. We thank you for your participation and ask that you please disconnect your lines.
