BellRing Brands, Inc. (BRBR) on Q3 2021 Results - Earnings Call Transcript
Operator: Welcome to BellRing Brands Third 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 PM Eastern Time. The dial-in number is 1 (800) 585-8367. And the passcode is 7479008. 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, BellRing Brands, for introductions. You may begin.
Jennifer Meyer: Good morning, and thank you for joining us today for BellRing Brands third 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'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 of 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 third quarter results and posted a supplemental presentation to our website. I'm happy to report that we turned in a record quarter with net sales of $342 million and adjusted EBITDA of $70.5 million. Performance exceeded our expectations, lifted by success of our growth initiatives and tremendous category momentum. Premier Protein and Dymatize grew net sales 65% and 99%, respectively, driven by distribution gains, strong velocities and favorable category tailwinds. Following our better-than-expected third quarter results, we are once again raising our outlook for the year. We now expect net sales to grow at 27% to 30% for the year. We're also raising our adjusted EBITDA guidance range to between $230 million and $235 million. We continue to experience meaningful cost pressure. However, our price increase on shakes, upcoming powder pricing actions and our cost-out programs are helping to offset these headwinds. As a result of accelerated growth, coupled with network delays in adding Tetra capacity, we have run into short-term supply constraints. Over the next several quarters, we are adding significant capacity into our existing co-manufacturers as well as expanding our co-manufacturing network. Delays in 2021 capacity stem from the same issues I expect that you've heard from other companies, challenges with equipment delays and limitations on labor. While we expect inventory will be low for several quarters, our organization has experience managing in this environment, while focusing on our priorities to deliver for our long-term growth objectives. We expect net sales growth and adjusted EBITDA margin to be well within our long-term algorithm. We will give more context in detail in the November call. Turning to this quarter. We are seeing tremendous growth in the convenient nutrition category. Ready-to-drink beverages grew 29% versus a year ago, but even more impressive is the sequential growth.
Paul Rode: Adjusted EBITDA was $70.5 million, up 83% and EBITDA margin was 20.6%. Our top line performance is very strong across all brands. Also, results further benefited from category tailwinds as well as lapping the COVID-related impacts in the prior year. Premier Protein net sales increased 65%, primarily driven by RTD shakes. Distribution gains, strong velocities and better performing promotions drove this growth. Additionally, we lapped the negative COVID impacts in the prior year period. Last, shake net sales growth outpaced volume growth, reflecting list price increases taken in the third quarter and favorable product and customer mix when compared to prior year. Dymatize net sales nearly doubled this quarter, growing 99% and benefited from lapping the negative COVID impacts in specialty and international markets in the prior year period. Strong distribution gains and velocities were the primary contributor to the brand’s exceptional growth. Favorable product and customer mix drove an improvement in average net selling prices. Turning back to consolidated results. Gross profit of $111.3 million increased 62% this quarter, with an expected decrease in gross profit margin to 32.5%. As we have previously discussed, this decline resulted from higher freight and input costs. SG&A expenses were $42.6 million, and as a percentage of net sales declined 360 basis points to 12.4%, reflecting leverage of our SG&A base. This leverage was achieved by $3.4 million of incremental marketing and consumer advertising expenses and higher incentive compensation accruals. Operating profit of $51.5 million increased 68% or $21 million compared to prior year and was negatively impacted by $11.8 million of accelerated amortization. This was a noncash expense recorded in connection with our decision to discontinue our Supreme Protein brand and was treated as an adjustment for non-GAAP measures. The Supreme brand was fully amortized in the third quarter. We had a strong third quarter for cash flow, generating $72 million from operations. As of June 30, net debt was $529 million, and net leverage was 2.3x. Turning to our outlook. As Darcy previewed, we are raising our fiscal 2021 net sales guidance range to $1.25 billion to $1.28 billion, with adjusted EBITDA expected to range between $230 million and $236 million. We expect our strong sales and category momentum to continue into the fourth quarter. Organic growth, distribution gains, planned promotional activity and our shape price increase are driving net sales growth. Whey protein and freight inflation have continued to rise ahead of our expectations, and along with milk protein inflation will pressure year-over-year gross margins. Recall our fourth quarter typically carries the lowest gross margins driven by the volume of promotional activity in the fourth quarter. We expect SG&A leverage to offset a portion of the gross margin decline. We are thrilled with our year-to-date performance. Our confidence in the BellRing story remains unchanged. With that, I would like to turn the call back over to the operator for questions.
Operator: . And our first question is going to come from the line of Andrew Lazar, Barclays.
Andrew Lazar: Darcy, I wanted to start off with, maybe trying to compare a little bit, the severity of capacity constraints that BellRing faced at the end of '18 and early '19, just sort of what you're seeing now. Back then, obviously, it forced the company to cut back on a couple of flavors and then, sort of, SKUs, maybe cut back on some promotional activity with key customers, and it certainly did impact the top line performance pretty significantly. Can you compare a little bit about what you're seeing now to then and if it requires you to pull back on flavors or SKUs or innovation in any way or promotional activities with key customers? That would be the first one.
Darcy Davenport: Sure. So it is -- I would say it's pretty different from last time. So first of all, we have a healthy network of co-manufacturers. We've worked really hard to diversify and to add more co-manufacturers to our network. And we are making significantly more shakes every quarter. So I mean, just to give a little more color than I did during the prepared remarks is, we just significantly grew faster than our best case that we forecasted. So we were prepared for a 20% increase, which was double our long-term algorithm. And we have flexibility to go even higher than that. And we ended up growing 30%. And so -- and then the flex capacity that we thought we had that we are relying on was delayed to '22, and those were some of the reasons that I talked about before, which was around manufacturing delays and labor issues. So we went into our -- we basically dug into our inventory. And then -- and as you know, we've talked about how to add -- it takes some time to add capacity. So you're right, we're going to -- we're not going to be forced to go as extreme as we did before, which was going down to 2 flavor strategies. What we will likely do is we're going to have to manage demand to supply for several quarters. And we will use the obvious levers, which would be both promotion and marketing to do so.
Andrew Lazar : Yes. Got it. And then I think last quarter, you mentioned that your, sort of, base planning assumptions for elasticity did not include competitors raising pricing. I have to assume, given what we've seen in costs for everybody that, generally, there's been a general raising of prices across the board, but which would make elasticity maybe a little bit more tenable anyway. But I wanted to get a sense from you on how that's been progressing.
Darcy Davenport: Yes. That's exactly right. So -- and that is one of the factors that led to our beat in the quarter. The first was just around the category tailwinds, which were stronger than we expected. But the second is around our assumptions around shake elasticity. We did assume that we would see some elasticity and a couple of things factored in. We just haven't. We haven't seen any hit to volume at all. And it was really a result of a couple of things. One, retailers reflected at shelf later than we expected. And then also, as you said, competitors, there have been competitors follow. We just started seeing that late in the quarter. And then lastly, we just -- we've actually seen volume increases instead of volume declines since we raised price.
Operator: And our next question will come from the line of Ken Goldman, JPMorgan.
Ken Goldman: I wanted to first follow up on Andrew's question about some of the balance between supply and demand. I think, Darcy, you mentioned that it's -- you'll have to manage demand to supply for several quarters. I assume that your guidance for 2022 has been somewhat informed by that. Is there any rough sense you can give? I know it's early and you're not giving full guidance at this time. But rough sense of what you can give for how that 10% to 12% range has been, perhaps, affected by your relative inability to supply the demand at this time?
Darcy Davenport: We factored that into our preliminary estimates. And you're exactly right, Ken. We're not ready to go into details into '22, but we did want to give you a sense that we still believe that we can grow 10% to 12% on top of the, kind of, outsized growth that we saw this year. And that's going to be coming from several different places. It's going to be -- we're still going to see growth. We expect to still see growth in shakes. But we now have strong powder businesses, and we're going to -- we expect to see growth in powders as well.
Ken Goldman: Great. And then my follow-up, for Premier over the 52 weeks, last 52 weeks, you showed a slide, you're growing almost as fast in supermarkets as you're going in eCom. I'm sure grocers are seeing these numbers, thinking about ways of expanding their visibility. Darcy, you previously said we're not seeing any signs of a given space in a much more heavily traveled aisle soon. So I guess I'm not going to ask about that, but what other steps can you take with your supermarket customers to improve your visibility and, sort of, take advantage of those velocity trends? And maybe it's just as simple as continuing to build more and better displays, but just wanted to, I guess, get your thoughts there.
Darcy Davenport: Yes, that's exactly right. We know what drives our business, displays are a really effective way -- within the tool set that we have right now, effective ways to bring in new consumers. I mean, I said this in my prepared remarks, but we're bringing in 80% of the new people into the category. So we are doing that even within the set, but display is really effective. Our advertising is really effective and just the product. So I think that what we're doing is working. Those grocery and mass customers are seeing the tremendous growth. So there, we're both incented to continue to drive the category.
Operator: And our next question will come from the line of Pamela Kaufman, Morgan Stanley.
Pamela Kaufman: What factors do you see as contributing to the elevated demand that you've seen recently? And I guess, what's, kind of, driven it to be ahead of what you were planning for relative to your expectations?
Darcy Davenport: There were basically 3 areas that over-performed. And I referenced some of them when responding to Andrew's question. But the first was the category. The category -- we haven't seen these types of increases in the category, really, ever. The category was, liquids was up 29% even -- in the quarter, but even some of that is due just a lapping COVID. But even when you look at June and July, and when you get to June and July, you are no longer lapping the COVID period. So that is pretty clean. And the category is still growing mid-double digits. So if you think of what it was like pre-COVID, we were seeing pretty much steady 5% to 6%. Now we're seeing mid-double digits, but it's pretty dramatic. So -- and that goes back to, I hit some of the drivers from a consumer behavior standpoint in my prepared remarks, but we did conduct a study to really get under what is driving this, kind of, outsized category growth. And it was those things that I referenced. Consumers are looking to eat healthier. They are -- health, I mean we all know this. During this COVID period, we are constantly thinking about how to improve our overall health. Consumers are looking to lose weight after, kind of, a sedentary period. They're looking to exercise more, and they're looking for, kind of, sports products. They're also seeking health advice and doctors are recommending this category, and they're recommending Premier Protein. And then there's also just some economic conditions as stimulus and America reopens, I mean traffic just generally is just very high. So those are all leading to, kind of, outsized category tailwinds that we were not expecting the gravity of it. The second piece is around shape pricing elasticity. We did have some conservatism in our numbers. We're not seeing them. And then the third is really around Dymatize. We saw better-than-expected results out of specialty and international than we forecasted.
Pamela Kaufman: Great. That's very helpful. And to what degree is the capacity that's coming online incremental to the original plan? And how much flexibility will you have to scale back on production if demand moderates?
Darcy Davenport: The new -- I mean the new capacity is all incremental. So the -- and then from a -- we always incorporate some flexibility into our forecast. So we will always be able to, kind of, dial it up and dial it down.
Operator: And our next question will come from the line of Chris Growe with Stifel.
Chris Growe : I just had a question, if I could, first on -- to understand, I think, to Paul, the pricing came through this quarter. You also talked about inflation, kind of, coming in ahead of your expectations. I just was curious, as you stand today, does pricing offset inflation? And is there a chance to go for more pricing, given some of the continued inflation you're seeing in your business?
Paul Rode: Yes, you're correct. We have seen continued inflation, particularly on our powder business, and so that we have a price increase going into effect in Q1 on that. And we're continuing to evaluate the level of price increase there because the increases on whey protein have really, really gotten much higher. On our shake business, our price increase is largely offsetting commodities. But as they continue to rise, we'll continue to evaluate some additional levers to pull there. Will offset that, especially as we look to 2022.
Chris Growe : Okay. And then I had a question, Darcy, on supply and just thinking about when you run into these issues where you have a shortage of supply in some cases, just like the cost basis of your supply chain. So I'm just -- are there specific geographies, for example, now you've got a pretty good diverse supply of product where you have less of an inventory buffer, and therefore, you can have some more margin effect. And therefore, as you get back to kind of full production, you can actually get a better, kind of, lower cost opportunity for your business. Does that make sense?
Darcy Davenport: It makes perfect sense. And I'll start, and I'll let Paul add on. But you're right. I mean we are -- during this period of time when we're low on inventory, we're basically shipping product wherever it is to wherever it needs to go, which is not efficient. And so -- and we will continue doing that for several quarters until we build back up our inventory. And once we do, then we're going to see the benefit of that. So if you kind of -- obviously, we're going to -- this is all dynamic. But if I were betting, I think we'd see that towards the end of '22.
Paul Rode: Yes, Chris, you're correct. I mean we do have some, what we call rate inefficiencies in our numbers, especially in Q4. As to Darcy's point, we are working hard to ship product wherever it needs to go, and that's not always going to be the most optimal cost. And as we expand our network, then it gives us even more flexibility to optimize freight.
Operator: And our next question is going to come from the line of Kaumil Gajrawala, Credit Suisse.
Kaumil Gajrawala : The first one is on investment spend in marketing. Now that wellness has really taken off, obviously, this wouldn't have been part of the plan a couple of years ago, in particularly, powders. Has this changed your investment plan or your capital deployment strategies?
Darcy Davenport: Yes. On powders, absolutely. So we see -- and I think it's -- we've seen great tailwinds on, kind of, our powder businesses, and that is both Dymatize and Premier Protein. What I am excited about our powder portfolio is, we have 2 brands that go after 2 distinct consumers. And they both are -- and we have figured out what drives those businesses. We have a ton of upside. I think there is tremendous opportunity, especially on, kind of, mainstream powders. If you look back at what Premier did to RTDs and -- meaning the kind of mainstreaming of that category. I think that's coming in powders. We're starting to see it. I mentioned that everyday powders in track channels is now the same size as sports, which is a really big change in the category. So absolutely, we're planning on supporting powders. We are -- because we've seen some, kind of, outsized demand on powder, we do need to build up our inventories again. We did -- our demand was higher than our capacity for powder, so we did dip into our inventory. But once we build that up, we're going to be supporting it strongly next year.
Kaumil Gajrawala: If I could ask a question that's in some ways maybe linked to the first question, which is, in your prepared remarks as it relates to the Post transaction, you mentioned liquidity as well as something strategic. Is M&A, maybe, now higher on your priority list, given that transaction and how you're looking at the categories?
Darcy Davenport: Nothing has changed in our, kind of, general view on M&A. I mean I still think -- you've heard me say this many times, by the way, we're focused on the -- our organic growth of our brands. We still believe that's the biggest opportunity. However, we are constantly looking at what's out there from an M&A perspective. And so this definitely readies us even more to take advantage of those opportunities, but that's not the driving factor.
Operator: And our next question will come from the line of Bill Chappell with Truist Securities.
Bill Chappell: Darcy, I fully get the pickup in health and wellness at the end of the pandemic and what your studies -- losing weight and feeling healthy or something like that. But did something in your findings see that shakes versus bars, kind of, tipped? Because it seems like you're certainly outperforming the -- within the various forms and factors. And I didn't know -- that would seem, if we were all going back to work and on the go, maybe that would drive it. But I didn't know if there was some reason why you were seeing and if it was sustainable, that shakes are now really, kind of, stepping up even further.
Darcy Davenport: So bars have, over time, I mean, they were -- if you think of the 3 form: bars, shakes and powders, and the degree that those categories or subcategories have mainstreamed, bars have definitely mainstreamed first. So -- and when I say mainstreamed, bars have really become more of a snack food. The household penetration of bars is 50% or about 45%. And so it already really has gone from, I would say -- it's more of a healthier snack, but it is a snack, whereas both shakes and powders haven't gone there to that degree. I mean, household penetration of shakes still at about 25%. So if you think, I mean, it could double just to get to where bars are. So I do believe -- and then powders is even lower from a household pen standpoint. I think there is more of an association of, kind of, proactive health there, from everything from, kind of, higher protein levels to immunity claims to vitamins and minerals. I mean, the vitamin and minerals, so when we ask consumers why, from a nutritional standpoint, they purchase our shakes, it's #1 protein and second is the vitamin and mineral blend. So I think that, just, there is more of a health halo around both shakes and powders, where I think there's more of a snacking halo around bars.
Bill Chappell: Got it. But nothing has really changed over the past 4, 5 months, it's just, kind of, coming out those have kind of manifested?
Darcy Davenport: Yes, I don't think anything has changed in -- from the product delivery standpoint. What I think has changed is just the intensity and the focus around health and wellness and their focus -- and also, I mean, the big reason why people enter the category is they want to lose weight. It's not about going to those weight management brands but people -- I mean, we get success stories all the time around people using Premier Protein and losing weight.
Bill Chappell: Got it. And then one -- just a question on channel. I mean now you've come through a season of expanding even further into the club channel, where you probably have 5x the number of SKUs that a normal CPG company would have in a club channel. I mean -- but you're still seeing strong growth there. I guess looking forward, is there a possibility of further SKUs, further shelf space? Is it just velocity here? Or are we starting to see some maturation of that and most of the growth will come from non-club channels going forward?
Darcy Davenport: Yes. I mean our -- I'm really pleased with our club channel growth. And really it is around velocities and traffic. I don't expect us to get a lot more distribution in the club channel, but I do think there's a lot of upside just from a household penetration and just the -- more people even -- just leveraging the incredible, kind of, traffic that the club channel is getting right now. I mean, their traffic numbers are off the charts, and it's really impressive. So I think that we'll be leveraging their increased traffic, as well as there's a lot of upside just from a household penetration standpoint on our brand in the club channel.
Operator: Our next question will come from the line of Bryan Spillane with Bank of America.
Bryan Spillane: So I wanted to ask a question just about the capacity expansion and just get a little bit more color on a couple of items. One is just, it sounded like, Darcy, from your prepared remarks, was this a project that's already been delayed? I think you mentioned something about other companies having issues getting equipment. So I guess that's my first question is just, when did this start? Has it already been delayed is the first question.
Darcy Davenport: So yes. So I would say it is a twofold problem, I guess. So the first was outsized demand, which I talked about that. The second was our -- when you think about our flex capacity, that -- to get that flex capacity, we were relying on new lines to come in to our existing co-manufacturers. There was -- we were expecting to see approximately 9 lines, only 4 came in. So only 4 got put into our co-man network, 5 got delayed to next year. So that is what I was talking about. I think that if those lines came in, I think that we'd be in a different situation. However, I want to just be super clear, our co-mans are amazing, and they have delivered on their commitments. And they've done extraordinary work for us to support our business throughout this pandemic. So I have nothing but positive to say about our co-man.
Bryan Spillane: Yes. No, I appreciate that. I just -- I think we've all had experiences with difficulty buying everything from patio stones to lumber and just, projects have been delayed. I'm just trying to get a sense for what's the risk of further delay. Like is the equipment already in transit being delivered? Is there a labor issue in terms of getting the lines up and running? Just, it'd be great to know like what percentage of what needs to be done to get those lines up and running next year has been completed. Or like where are we in the time line of that project? And is there a possibility for further delays?
Darcy Davenport: Yes. And it's really not one project, and it's not one co-man. So it's -- we're basically adding -- we are capacity every quarter. And we are adding -- and when I say we, I mean in partnership with our co-man partners. So they're adding capacity, so some of it is labor. The situation that I was told by the CEO of one of our partners was they have 4 lines and every weekend, they don't have enough labor to run -- one sits idle. One line sits idle because they don't have the labor to run it. So that just gives you an example. So right there in that situation, the capacity is in there. It's just about training, getting enough labor. And these are the talent -- high-talent labor. And so it's about training them and bringing them in. That is well on its way. There are different situations where we are -- we've already gotten the equipment and it's being installed. And then there are other ones that are more long lead where -- that we're waiting for the equipment to be delivered. So I would say there are various time lines that we have factored in and we have been conservative in our projections.
Operator: And our next question is going to come from the line of Rob Dickerson with Jefferies.
Rob Dickerson: Darcy, just, kind of, a general question around the capacity, again. But, kind of, how it differs potentially for you relative to the category? Just, obviously, it sounds like category growth that you’ve stuck into is far ahead of where it was just 2 years ago. My assumption is you are likely or hopefully not the only company in this situation. So I guess, kind of, a direct question was just, as you get through this increased capacity build to meet demand, as you look out throughout the category in your competition, do you feel like others are in a similar situation such that your actual market share should not be straddled because others might be able to fill in that demand more quickly than you?
Darcy Davenport: Yes, we are not alone. So the entire aseptic processing network is constrained. So if anyone is trying to get more capacity than they have already contractually committed to, it's going to be difficult. It's going to be -- it's going to take some time until the network catches up to this amazing increase of demand.
Rob Dickerson: Okay. Fair enough. And then just mechanically for you, Paul. I know there was a question earlier around M&A. Darcy saying you're thinking about capital allocation in the same way, continue to look at pipeline. I heard on the other call this morning and, kind of, saw in the release, it sounds like Post distribution from Post, that leverage would be at a rate similar to the IPO. And I just actually had a number of people keep asking this. But the one question is, kind of, what is that leverage ratio when you went public? And then secondly, as you think through that special dividend, just to clarify, it sounds like what is implied here is just that cash would be coming out of BellRing, but you're going to put more leverage on the business, pay the special dividend and then you'll reset from there. So kind of indirectly, it sounds like it'd be fair to assume that further acquisitions wouldn't be a near-term event, especially given the capacity constraints and the special dividend.
Paul Rode: Yes. So Rob, this morning, we did touch on the leverage that was similar to the IPO timeline. So that range was near 4x. It is just below 4x. But as a company, we're a fast-growing business that generates tremendous cash flow, and we de-lever very quickly. And so our expectation would be, while you may be right at a point in time, a large M&A transaction may be a little more challenging at that leverage level, but we can de-lever so quickly that we don't see it as an impact related to our near-term strategy to seek M&A.
Rob Dickerson: Okay. Fair enough. And then just quickly, Darcy, I'm not sure I heard you in the prepared remarks, just talk about how, let’s say, having a co-man supply chain can actually potentially benefit you on the margin side relative to others that have it in-house? And then just speak with other companies, right, if there's a lot of upside, you're getting a lot of volumes. You're actually -- and the commodity environments normalized, they might get a lot of upside margin. But if it goes down, they might actually put pressure a lot more with the co-man, that's usually absorbed a little bit by those co-manufacturers. So I'm just curious if you could just, kind of, touch on that and how that may or may not help you going forward?
Darcy Davenport: Hey, Paul, I'm going to let you tackle this one.
Paul Rode: Yes. Is your question around -- maybe could you restate your question? I'm not sure I fully tracked it.
Rob Dickerson: It's just sometimes co-manufacturers absorb some of the costs, right, that you would have to absorb internally if you had a full in-house manufacturing. So I'm not sure if that's right, trying to get color on that.
Paul Rode: Yes, I can't speak for what others do. I think from our perspective, we control the buys of the major commodities. So we're buying the proteins because we believe that we can, with our scale of leverage, get the best buy of those proteins. There are some smaller things that our co-mans buy that -- we try to leverage where they have advantages to cost and then where we have advantages to cost. And then that's -- so that's how we see as, kind of, our competitive advantages as we're optimizing that on both ends. But I can't speak for how others work on that.
Operator: And our final question will come from the line of Ken Zaslow with Bank of Montreal.
Ken Zaslow: If you look at the elasticity and through the findings, it seems like your elasticity is actually fairly low and that there's able to be price increases. We've seen other companies called the confectionery companies who, kind of, transition a little bit towards making more frequent pricing changes, price increases rather than just doing it when there's inflation. Would you consider that as an option, given the low elasticity that you have?
Darcy Davenport: I mean we would. I think for now, we are still looking -- we are a growth brand. We are trying to expand. We believe that we are, sort of, in the early innings of the Premier Protein brand growth. We still have a ton of upside from a household penetration standpoint. We have a ton of upside from a market share standpoint. We're excited to grow the liquid category and have more people use this category and our brand. So I think that would be the reason why we would not, just because we are still wanting to grow as fast as we can. Now if we see increase -- those are always part of our evaluation as we're looking at rising costs, et cetera. I mean, there is a cliff at some point. We aren't seeing it now, but we're probably not seeing it because of the other competitors have brought it. Also, we didn't see it until many of our retailers didn't raise price until the middle of the quarter. But -- and we're going to be watching it closely.
Ken Zaslow: Okay. My second question is on repeat purchases, what was your repeat purchase? And what do you attribute to and what can you learn from those findings to do something better going forward? I'll leave it there.
Darcy Davenport: Yes. Our repeat rate has stayed over 50%, and that's for the last 5 years. So you think about from 2017 to now, how much our business has changed. I mean we've doubled household penetration, but yet our repeat has stayed above 50%, which is really -- I mean it's one of the top repeat rates in the category. So I think it's just a testament to an amazing product that consumers absolutely love. I mean one of the metrics that we track is around brand love, and that's really important. And so we want to always make sure that we are, kind of, surprising and delighting our consumers with -- and that's going to look -- we look across a lot of different, kind of, touch points. It's everything from new flavors to our improvement on our shake, around immunity. It includes all kinds of different improvements to the product as well as expanding. So I think that our goal is to keep that as high as possible. And based on the track record, I think we'll do that.
Operator: Thank you. And with that, we will conclude today's BellRing Brands Quarter 3 2021 Earnings Conference Call. We do appreciate your participation and ask that you please disconnect. Thank you.
