The Simply Good Foods Company Reports Fiscal Second Quarter 2025 Financial Results and Reaffirms Fiscal Year 2025 Outlook

DENVER, April 09, 2025 (GLOBE NEWSWIRE) -- The Simply Good Foods Company (NASDAQ:SMPL) ("Simply Good Foods," or the "Company"), a developer, marketer and seller of branded nutritional foods and snacking products, today reported financial results for the thirteen and twenty-six weeks ended March 1, 2025. The acquisition of Only What You Need, Inc. ("OWYN") was completed on June 13, 2024. Therefore, the Company's year-ago performance for the thirteen and twenty-six weeks ended February 24, 2024, does not include results of the OWYN business. The reference to "organic" or "legacy" Simply Good Foods in this press release encompasses Simply Good Foods' business excluding OWYN.

Second Quarter Summary:(1)

Net sales of $359.7 million versus $312.2 million

Net income of $36.7 million versus $33.1 million

Earnings per diluted share ("EPS") of $0.36 versus $0.33

Adjusted Diluted EPS(2) of $0.46 versus $0.40

Adjusted EBITDA(3) $68.0 million versus $57.8 million

Reaffirming Fiscal Year 2025(4) Outlook:

Net sales expected to increase 8.5% to 10.5%

Adjusted EBITDA expected to increase 4% to 6%

The fifty-third week in fiscal year 2024 is an approximately 2-percentage point headwind to both Net Sales and Adjusted EBITDA growth in fiscal year 2025 and is incorporated in the outlook above

"I am very pleased with our second quarter and first half results. We are executing well, adding new doors, winning with innovation, and driving brand awareness and household penetration of our brands" said Geoff Tanner, President and Chief Executive Officer of Simply Good Foods. "Simply Good Foods grew second quarter retail takeaway 7%, with organic(5) net sales growth up over 4%. Strong top-line enabled Adjusted EBITDA growth of 18% year-over-year, which also benefited from favorable commodities and strong cost discipline. In these uncertain times, we remain excited about the mainstreaming of consumer demand for high protein, low-sugar, low-carb foods and beverages, and we are confident our differentiated portfolio of three uniquely positioned brands puts us at the forefront of this generational shift."

Second Quarter 2025 Results

Net sales increased $47.5 million, or 15.2%, to $359.7 million. OWYN net sales contributed $33.8 million, or 10.8%, to reported net sales growth, while organic net sales grew 4.4%, driven by Quest. International organic net sales of $6.4 million declined $2.1 million versus the comparable year ago period.

Total Simply Good Foods retail takeaway(6) increased about 7% driven by strong Quest and OWYN point-of-sales growth of about 13% and 52%, respectively. Atkins retail takeaway was off about 10%.

Gross profit was $130.1 million, an increase of $13.3 million, or 11.4%, from the year ago period. The increase in gross profit was driven by organic volume growth and the inclusion of OWYN, partially offset by a $0.4 million non-cash inventory step-up purchase accounting adjustment related to the OWYN Acquisition. As a result, gross margin was 36.2%, a 120 basis points decrease versus last year, driven primarily by OWYN. The non-cash inventory step-up related to the OWYN Acquisition was a 10 basis points headwind to gross margin in the quarter.

Operating expenses of $75.4 million increased $6.6 million versus the comparable year ago period. Selling and marketing expenses increased $0.4 million to $35.1 million primarily due to the inclusion of OWYN offsetting declines on the legacy business. General and administrative ("G&A") expenses of $36.0 million increased $6.1 million compared to the year ago period. Excluding stock-based compensation of $4.7 million, integration expenses of $2.0 million, and term loan transaction fees of $0.7 million, second quarter fiscal year 2025 G&A increased $3.0 million to $28.6 million, driven primarily by the OWYN Acquisition.

One-time Business Transaction costs related to the OWYN Acquisition were $0.2 million.

Net interest income and interest expense was $5.6 million, an increase of $1.0 million versus the comparable year ago period. The interest expense component increase was primarily driven by a higher term loan debt balance due to the OWYN Acquisition.

Net income of $36.7 million increased $3.6 million, or 10.9%, as compared to $33.1 million in the comparable year ago period.

Adjusted EBITDA, a non-GAAP financial measure used by the Company that makes certain adjustments to net income calculated under GAAP, was $68.0 million versus $57.8 million in the year ago period.

Reported earnings per diluted share ("Diluted EPS") were $0.36 versus $0.33 in the year ago period. The weighted average diluted shares outstanding were approximately 101.8 million versus 101.3 million in the year ago period.

Adjusted Diluted EPS, a non-GAAP financial measure used by the Company that makes certain adjustments to Diluted EPS calculated under GAAP, was $0.46 versus $0.40 in the year ago period.

Year-to-Date Second Quarter Fiscal Year 2025 Highlights vs. Year-to-Date Second Quarter 2024

Net sales were $700.9 million versus $620.9 million

Net income of $74.9 million versus $68.7 million

Earnings per diluted share ("EPS") of $0.74 versus $0.68

Adjusted Diluted EPS of $0.95 versus $0.82

Adjusted EBITDA of $138.1 million versus $119.8 million

Net sales increased $80.0 million, or 12.9%, to $700.9 million. OWYN contributed $66.1 million, or 10.6%, to reported net sales growth, while organic net sales grew 2.3%, driven by Quest. International organic net sales were down $1.0 million versus the comparable year ago period.

Total Simply Good Foods retail takeaway increased about 8% driven by strong Quest and OWYN point-of-sales growth of about 12% and 57%, respectively. Atkins retail takeaway was off about 7%.

Gross profit was $260.6 million, compared to $232.0 million in the year ago period. The increase in gross profit was driven primarily by the inclusion of OWYN, partially offset by a $1.4 million non-cash inventory step-up purchase accounting adjustment related to the OWYN Acquisition. As a result, gross margin was 37.2%, representing a decline of 20 basis points versus the comparable year ago period. Favorable commodity expenses were offset by the inclusion of OWYN. The non-cash inventory step-up related to the OWYN Acquisition was a 20 basis point headwind.

Operating expenses of $151.3 million increased $19.2 million versus the comparable year ago period. Selling and marketing expenses increased $1.4 million to $68.1 million primarily driven by the inclusion of OWYN offsetting declines on the legacy business. General and administrative ("G&A") expenses of $74.1 million increased $17.2 million compared to the year ago period. Excluding stock-based compensation of $8.3 million, integration expenses of $6.9 million, and term loan transaction fees of $0.7 million, second quarter year-to-date fiscal year 2025 G&A increased $9.5 million to $58.2 million, driven primarily by the OWYN Acquisition.

One-time Business Transaction costs related to the OWYN Acquisition were $0.8 million.

Net interest income and interest expense was $12.7 million, an increase of $3.1 million versus the comparable year ago period. The interest expense component increase was primarily driven by a higher term loan debt balance due to the OWYN Acquisition.

Net income was $74.9 million compared to $68.7 million for the comparable year ago period.

Adjusted EBITDA, a non-GAAP financial measure used by the Company that makes certain adjustments to net income calculated under GAAP, was $138.1 million versus $119.8 million in the year ago period.

Reported earnings per diluted share ("Diluted EPS") were $0.74 versus $0.68 in the year ago period. The weighted average diluted shares outstanding was approximately 101.7 million versus 101.2 million in the year ago period.

Adjusted Diluted EPS, a non-GAAP financial measure used by the Company that makes certain adjustments to Diluted EPS calculated under GAAP, was $0.95 versus $0.82 in the year ago period.

Balance Sheet and Cash Flow

At the end of the second quarter of fiscal year 2025, the Company had cash of $103.7 million and an outstanding principal balance on its term loan of $300.0 million. During the quarter, the Company repaid $50.0 million of its term loan debt, bringing fiscal year-to-date repayments to $100.0 million. Since the closing of the OWYN Acquisition, when the term loan balance increased by $250.0 million, the Company has repaid $190.0 million. Cash flow from operations was about $63.3 million versus $94.0 million in the year ago period. The decline was primarily due to lower net working capital.

As of March 1, 2025, the Company's trailing twelve-month Net Debt to Adjusted EBITDA ratio was 0.7x(7).

CFO Succession Plan

On January 28, 2025, the Company announced Chief Financial Officer Shaun Mara's plan to retire, effective July 3, 2025. In connection with Mr. Mara's retirement, the Company also announced the hiring of Christopher J. Bealer as Senior Vice President of Finance, as of April 1, 2025. Mr. Bealer is expected to succeed Mr. Mara as Chief Financial Officer upon Mr. Mara's retirement.

Fiscal Year 2025 Outlook

Due to solid retail takeaway and strong Adjusted EBITDA growth to start the year, the Company reaffirms its fiscal year 2025 outlook. The Company expects organic net sales growth to be driven primarily by volume. The Company is also reaffirming its outlook for gross margin, which is still expected to decline approximately 200 basis points versus fiscal year 2024, with favorable commodity expenses year-to-date, ongoing productivity and cost savings initiatives, and pricing expected to be offset by higher input costs in the second half, as well as preliminary estimates of expected costs related to recently announced tariffs.

Therefore, the Company anticipates the following in fiscal year 2025:

Net Sales expected to increase 8.5% to 10.5%

OWYN fiscal year 2025 Net Sales expected to be in the $140-150 million range

Adjusted EBITDA expected to increase 4% to 6%

The fifty-third week in fiscal year 2024 is an approximately 2-percentage point headwind to both Net Sales and Adjusted EBITDA growth in fiscal year 2025 and incorporated in the outlook above

Assuming a comparable full year of OWYN results are included in fiscal year 2024, as well as the exclusion of the fifty-third week in fiscal year 2024, fiscal year 2025 is expected to be in line with the Company's long-term algorithm; net sales growth in the 4-6% range and Adjusted EBITDA growth slightly greater than the net sales increase

The foregoing outlook assumes current economic conditions and consumer purchasing behavior remain generally consistent over the balance of the Company's fiscal year.

___________________________________(1) All comparisons for the second quarter or fiscal year-to-date period ended March 1, 2025, versus the comparable year-ago period ended February 24, 2024. (2) Adjusted Diluted Earnings Per Share is a non-GAAP financial measure. The Company excludes acquisition-related costs, such as business transaction costs, integration expense and depreciation and amortization expense in calculating Adjusted Diluted Earnings Per Share. Please refer to "Reconciliation of Adjusted Diluted Earnings Per Share" in this press release for an explanation and reconciliation of this non-GAAP financial measure.(3) Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") is a non-GAAP financial measure. Please refer to the "Reconciliation of EBITDA and Adjusted EBITDA" in this press release for an explanation and reconciliation of this non-GAAP financial measure.(4) The Company does not provide a forward-looking reconciliation of expected fiscal year 2025 Adjusted EBITDA to Net Income, the most directly comparable GAAP financial measure, because we are unable to provide such a reconciliation without unreasonable effort due to the unavailability of reliable estimates for certain components of consolidated net income and the respective reconciliations, and the inherent difficulty of predicting what the changes in these components will be throughout the fiscal year. As these items may vary greatly between periods, we are unable to address the probable significance of the unavailable information, which could significantly affect our future financial results.(5) "Organic" or "Legacy" growth refers to combined performance of the Company prior to the acquisition of OWYN on June 13, 2024, specifically including the Quest and Atkins brands in North America, as well as the International business.(6) Combined Quest, Atkins, and OWYN IRI MULO++C store and Company unmeasured channel estimate for the 13-weeks ending March 2, 2025, vs. the comparable 13-week year ago period.(7) Net Debt to Adjusted EBITDA is a non-GAAP financial measure which Simply Good Foods defines as the total debt outstanding under our credit agreement with Barclays Bank PLC and other parties ("Credit Agreement"), reduced by cash and cash equivalents, and divided by the Company's trailing twelve month Adjusted EBITDA, as previously defined. The Company does not provide a forward-looking reconciliation of Net Debt to Adjusted EBITDA to Net Debt to Consolidated Net Income, the most directly comparable GAAP financial measures, expected for fiscal year 2025, because we are unable to provide such a reconciliation without unreasonable effort due to the unavailability of reliable estimates for certain components of consolidated net income and the respective reconciliations, and the inherent difficulty of predicting what the changes in these components will be throughout the fiscal year. As these items may vary greatly between periods, we are unable to address the probable significance of the unavailable information, which could significantly affect our future financial results.

Conference Call and Webcast InformationThe Company will host a conference call with members of the executive management team to discuss these results today, Wednesday, April 9, 2025, at 6:30 a.m. Mountain time (8:30 a.m. Eastern time). Investors interested in participating in the live call can dial 877-407-0792 from the U.S. and International callers can dial 201-689-8263. In addition, the call and accompanying presentation slides will be broadcast live over the Internet hosted at the "Investor Relations" section of the Company's website at http://www.thesimplygoodfoodscompany.com. A telephone replay will be available approximately two hours after the call concludes and will be available through April 16, 2025, by dialing 844-512-2921 from the U.S., or 412-317-6671 from international locations, and entering confirmation code 13751795.

About The Simply Good Foods CompanyThe Simply Good Foods Company (NASDAQ:SMPL), headquartered in Denver, Colorado, is a consumer packaged food and beverage company that is bringing nutritious snacking with ambitious goals to raise the bar on what food can be with trusted brands and innovative products. Our product portfolio consists primarily of protein bars, ready-to-drink (RTD) shakes, sweet and salty snacks, and confectionery products marketed under the Atkins, Quest, and OWYN brands. We are a company that aims to lead the nutritious snacking movement and is poised to expand our healthy lifestyle platform through innovation, organic growth, and investment opportunities in the snacking space. To learn more, visit http://www.thesimplygoodfoodscompany.com. 

Investor ContactJoshua LevineVice President, Investor Relations and Treasury The Simply Good Foods Company

Forward Looking Statements

Certain statements made herein are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by or include words such as "will", "expect", "intends" or other similar words, phrases or expressions. These statements relate to future events or our future financial or operational performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. We caution you that these forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. You should not place undue reliance on forward-looking statements. These statements reflect our current views with respect to future events, are based on assumptions and are subject to risks and uncertainties. These risks and uncertainties relate to, among other things, our ability to achieve our estimates of OWYN's net sales and Adjusted EBITDA and our anticipated synergies from the OWYN Acquisition, our net leverage ratio post-acquisition, our Adjusted EPS post-acquisition, our ability to maintain OWYN personnel and effectively integrate OWYN, our operations being dependent on changes in consumer preferences and purchasing habits regarding our products, a global supply chain and effects of supply chain constraints and inflationary pressure on us and our contract manufacturers, our ability to continue to operate at a profit or to maintain our margins, the effect pandemics or other global disruptions on our business, financial condition and results of operations, the sufficiency of our sources of liquidity and capital, our ability to maintain current operation levels and implement our growth strategies, our ability to maintain and gain market acceptance for our products or new products, our ability to capitalize on attractive opportunities, our ability to respond to competition and changes in the economy including changes regarding inflation and increasing ingredient and packaging costs and labor challenges at our contract manufacturers and third party logistics providers, the amounts of or changes with respect to certain anticipated raw materials and other costs, difficulties and delays in achieving the synergies and cost savings in connection with acquisitions, changes in the business environment in which we operate including general financial, economic, capital market, regulatory and geopolitical conditions affecting us and the industry in which we operate, our ability to maintain adequate product inventory levels to timely supply customer orders, changes in taxes, tariffs, duties, governmental laws and regulations, the availability of or competition for other brands, assets or other opportunities for investment by us or to expand our business, competitive product and pricing activity, difficulties of managing growth profitably, the loss of one or more members of our management team, potential for increased costs and harm to our business resulting from unauthorized access of the information technology systems we use in our business, expansion of our wellness platform and other risks and uncertainties indicated in the Company's Form 10-K, Form 10-Q, and Form 8-K reports (including all amendments to those reports) filed with the U.S. Securities and Exchange Commission from time to time. In addition, forward-looking statements provide the Company's expectations, plans or forecasts of future events and views as of the date of this communication. Except as required by law, the Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date and cautions investors not to place undue reliance on any such forward-looking statements. These forward-looking statements should not be relied upon as representing the Company's assessments as of any date subsequent to the date of this communication.

The Simply Good Foods Company and SubsidiariesConsolidated Balance Sheets (Unaudited, dollars in thousands, except share and per share data)

 

 

 

 

 

 

 

March 1, 2025

 

August 31, 2024

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash

 

$

103,682

 

 

$

132,530

 

Accounts receivable, net

 

 

157,145

 

 

 

150,721

 

Inventories

 

 

163,734

 

 

 

142,107

 

Prepaid expenses

 

 

9,872

 

 

 

5,730

 

Other current assets

 

 

10,034

 

 

 

9,192

 

Total current assets

 

 

444,467

 

 

 

440,280

 

 

 

 

 

 

Long-term assets:

 

 

 

 

Property and equipment, net

 

 

22,790

 

 

 

24,830

 

Intangible assets, net

 

 

1,329,451

 

 

 

1,336,466

 

Goodwill

 

 

589,974

 

 

 

591,687

 

Other long-term assets

 

 

40,498

 

 

 

42,881

 

Total assets

 

$

2,427,180

 

 

$

2,436,144

 

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

75,065

 

 

$

58,559

 

Accrued interest

 

 

59

 

 

 

265

 

Accrued expenses and other current liabilities

 

 

29,026

 

 

 

49,791

 

Total current liabilities

 

 

104,150

 

 

 

108,615

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

Long-term debt, less current maturities

 

 

298,537

 

 

 

397,485

 

Deferred income taxes

 

 

172,452

 

 

 

166,012

 

Other long-term liabilities

 

 

34,284

 

 

 

36,546

 

Total liabilities

 

 

609,423

 

 

 

708,658

 

See commitments and contingencies (Note 10)

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued

 

 

—

 

 

 

—

 

Common stock, $0.01 par value, 600,000,000 shares authorized, 103,415,302 and 102,515,315 shares issued at March 1, 2025, and August 31, 2024, respectively

 

 

1,034

 

 

 

1,025

 

Treasury stock, 2,365,100 shares and 2,365,100 shares at cost at March 1, 2025, and August 31, 2024, respectively

 

 

(78,451

)

 

 

(78,451

)

Additional paid-in-capital

 

 

1,335,892

 

 

 

1,319,686

 

Retained earnings

 

 

562,134

 

 

 

487,265

 

Accumulated other comprehensive loss

 

 

(2,852

)

 

 

(2,039

)

Total stockholders' equity

 

 

1,817,757

 

 

 

1,727,486

 

Total liabilities and stockholders' equity

 

$

2,427,180

 

 

$

2,436,144

 

The Simply Good Foods Company and SubsidiariesConsolidated Statements of Income and Comprehensive Income(Unaudited, dollars in thousands, except share and per share data)

 

 

 

 

 

 

 

Thirteen Weeks Ended

 

Twenty-Six Weeks Ended

 

 

March 1, 2025

 

February 24, 2024

 

March 1, 2025

 

February 24, 2024

Net sales

 

$

359,655

 

 

$

312,199

 

 

$

700,923

 

 

$

620,877

 

Cost of goods sold

 

 

229,518

 

 

 

195,329

 

 

 

440,300

 

 

 

388,889

 

Gross profit

 

 

130,137

 

 

 

116,870

 

 

 

260,623