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Core Insights - Simply Good Foods Company will report its financial results for Q4 and Fiscal Year 2025 on October 23, 2025, with a live conference call scheduled for 6:30 a.m. Mountain Time [1] - The call will feature Geoff Tanner, President and CEO, and Chris Bealer, CFO [1] Company Overview - Simply Good Foods Company, headquartered in Denver, Colorado, is a leader in the Nutritional Snacking category, offering a range of products including high protein chips, bars, ready-to-drink shakes, and low sugar sweets [4] - The company aims to expand its healthy lifestyle platform through innovation-driven organic growth and external investment opportunities [4]

With a degree in Finance and Accounting and previous experience in financial advisory, I use The Sharpe Quest to share my path as an independent investor and market analyst. My approach mixes long-term conviction holdings with tactical sector rotations, driven by the belief that investing isn’t about being right, it’s about making money. I focus on undercovered opportunities and momentum-driven sectors. All views are my own and not financial advice.Analyst’s Disclosure:I/we have no stock, option or similar ...

Core Insights - Crude Value Insights provides an investment service and community focused on the oil and natural gas sector, emphasizing cash flow and the companies that generate it, which leads to value and growth prospects with real potential [1] Group 1 - The service includes access to a 50+ stock model account, in-depth cash flow analyses of exploration and production (E&P) firms, and live chat discussions about the sector [1] - A two-week free trial is available for new subscribers, promoting engagement with the oil and gas market [2]

Company Overview - The Simply Good Foods Company (SMPL) operates as a "nutritious snacking platform" with three main brands: Quest, Atkins, and OWYN [2] - Atkins represents approximately 30% of net sales but is experiencing a decline, with FY 2024 sales down 6.6% [2][4] - Quest maintains brand strength but is facing moderating growth due to increased competition [3] Financial Performance - As of September 3rd, SMPL's share was trading at $28.66, with trailing and forward P/E ratios of 20.05 and 14.71, respectively [1] - The company's long-term guidance suggests 4-6% sales growth and slightly higher EBITDA growth, which is now questioned due to structural headwinds [4] - The equity shows a return on invested capital (ROIC) of 8% and lacks a dividend, with consensus earnings growth around 8% [5] Market Challenges - The Atkins segment is facing structural headwinds, leading to a persistent decline despite management's revitalization efforts [2][4] - Competitive pressures are increasing, particularly from established players and new entrants in the protein bar market, which leverage low barriers to entry [3][4] - The overall sales mix is highly concentrated in North America, with mass retailers and e-commerce channels accounting for over half of sales [4] Strategic Considerations - Management's focus on innovation is hindered by low R&D spending relative to peers, and promotional intensity has increased due to competitive pressures [4] - The potential for further deterioration in Atkins' performance or disappointing operational execution could lead to a downside of 10-15% from current levels [5] - While SMPL has a strong balance sheet that may allow for additional acquisitions, these may not address the underlying structural challenges [5]

Core Insights - Rackspace Technology and SMPL-C have formed a strategic partnership aimed at enhancing compliance automation for organizations working with federal agencies, particularly in relation to Cybersecurity Maturity Model Certification (CMMC) requirements [1][2][3] Group 1: Partnership Overview - The partnership will be facilitated through Rackspace Technology Government Solutions, focusing on secure, CMMC-authorized cloud infrastructure and compliance services [1] - The collaboration aims to simplify the compliance process by integrating SMPL-C's intelligent documentation and workflow engine with Rackspace's secure cloud infrastructure [2] Group 2: Benefits of the Partnership - The partnership seeks to create a unified ecosystem that simplifies and accelerates the CMMC compliance journey, addressing challenges faced by organizations that currently navigate compliance in silos [3] - By automating the documentation process, the collaboration aims to reduce costs associated with CMMC compliance for the defense sector [4] Group 3: Services Offered - Enterprises will benefit from automated gap assessments, documentation, and evidence tracking for CMMC certification [8] - Rackspace's CMMC-aligned environments and multicloud expertise will provide secure cloud hosting solutions [8] - The partnership offers ongoing advisory and support, ensuring continuous guidance and remediation from both Rackspace and SMPL-C [8]

Core Insights - The Atkins survey reveals that couples often unconsciously adopt each other's wellness habits, with 55% of respondents joining their partner's health journey without a conscious decision [1][3] - Nearly half (47%) of couples pursuing wellness goals together view it as the "ultimate relationship hack," with 66% noting that shared healthy habits reduce relationship stress [2][3] Survey Findings - 55% of individuals on GLP-1 medications report that their partner unintentionally lost weight, while 61% of non-GLP-1 users adopted healthier eating habits from their partners [3] - 59% of couples indicate that their partner is a significant influence on their wellness journey, and 70% of partners begin exercising more when their significant other does [4] Product and Brand Positioning - Atkins offers a variety of high-protein, low-carb products designed to support couples in their wellness journeys, including snacks and meal options [4][10] - The company aims to lead the nutritious snacking movement with innovative products that cater to health-conscious consumers [9][10] Partnership and Promotion - Atkins has partnered with reality TV couple Sean and Catherine Lowe to emphasize the importance of shared wellness journeys [5][6] - The Lowes highlight how mutual support and Atkins' product offerings facilitate maintaining healthy habits together [6] Methodology - The survey was conducted in May 2025 among 1,032 cohabitating couples in the U.S., focusing on those engaged in wellness and weight loss efforts [7]

PART I. Financial Information [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements of The Simply Good Foods Company and its subsidiaries for the period ended May 31, 2025, including balance sheets, statements of operations and comprehensive income, cash flows, and stockholders' equity, along with detailed notes explaining the company's operations, significant accounting policies, business combinations, revenue recognition, goodwill, debt, leases, and equity [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (May 31, 2025 vs. August 31, 2024) | Metric (in thousands) | May 31, 2025 | August 31, 2024 | Change | | :-------------------- | :----------- | :-------------- | :----- | | Total Assets | $2,430,388 | $2,436,144 | $(5,756) | | Total Liabilities | $589,437 | $708,658 | $(119,221) | | Total Stockholders' Equity | $1,840,951 | $1,727,486 | $113,465 | | Cash | $98,008 | $132,530 | $(34,522) | | Inventories | $164,464 | $142,107 | $22,357 | | Long-term debt, less current maturities | $248,920 | $397,485 | $(148,565) | [Consolidated Statements of Operations and Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Key Financial Performance (Thirteen Weeks Ended) | Metric (in thousands) | May 31, 2025 | May 25, 2024 | Change (YoY) | | :-------------------- | :----------- | :----------- | :----------- | | Net Sales | $380,956 | $334,757 | +13.8% | | Gross Profit | $138,519 | $133,626 | +3.7% | | Income from Operations | $59,320 | $58,774 | +0.9% | | Net Income | $41,102 | $41,334 | -0.6% | | Basic EPS | $0.41 | $0.41 | 0.0% | | Diluted EPS | $0.40 | $0.41 | -2.4% | Key Financial Performance (Thirty-Nine Weeks Ended) | Metric (in thousands) | May 31, 2025 | May 25, 2024 | Change (YoY) | | :-------------------- | :----------- | :----------- | :----------- | | Net Sales | $1,081,879 | $955,634 | +13.2% | | Gross Profit | $399,142 | $365,614 | +9.2% | | Income from Operations | $168,666 | $158,677 | +6.3% | | Net Income | $115,971 | $110,018 | +5.4% | | Basic EPS | $1.15 | $1.10 | +4.5% | | Diluted EPS | $1.14 | $1.09 | +4.6% | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (Thirty-Nine Weeks Ended) | Cash Flow Activity (in thousands) | May 31, 2025 | May 25, 2024 | Change | | :-------------------------------- | :----------- | :----------- | :----- | | Net cash provided by operating activities | $133,087 | $166,755 | $(33,668) | | Net cash used in investing activities | $(2,192) | $(2,345) | $153 | | Net cash used in financing activities | $(165,206) | $(43,569) | $(121,637) | | Net (decrease) increase in cash | $(34,311) | $120,841 | $(155,152) | | Cash at end of period | $98,008 | $208,681 | $(110,673) | - The decrease in cash provided by operating activities was primarily due to changes in working capital, driven by the timing of payments and receipts, the OWYN Acquisition, and inventory building, which consumed **$29.9 million** in cash for the thirty-nine weeks ended May 31, 2025, compared to **$6.8 million** provided in the prior year period[152](index=152&type=chunk) - Net cash used in financing activities significantly increased due to **$150.0 million** in principal payments on the Term Facility and **$24.3 million** in common stock repurchases during the thirty-nine weeks ended May 31, 2025, compared to **$45.0 million** in principal payments in the prior year[154](index=154&type=chunk) [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' Equity Changes (August 31, 2024 to May 31, 2025) | Metric (in thousands) | August 31, 2024 | May 31, 2025 | Change | | :-------------------- | :-------------- | :----------- | :----- | | Total Stockholders' Equity | $1,727,486 | $1,840,951 | $113,465 | | Retained Earnings | $487,265 | $603,236 | $115,971 | | Treasury Stock | $(78,451) | $(102,789) | $(24,338) | | Common Stock Shares Issued | 102,515,315 | 103,583,702 | +1,068,387 | - Net income contributed **$115.971 million** to retained earnings during the thirty-nine weeks ended May 31, 2025[16](index=16&type=chunk)[22](index=22&type=chunk) - The company repurchased **693,375 shares** of common stock for **$24.338 million** during the period, increasing treasury stock[22](index=22&type=chunk)[78](index=78&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) [Note 1. Nature of Operations and Principles of Consolidation](index=10&type=section&id=1.%20Nature%20of%20Operations%20and%20Principles%20of%20Consolidation) - The Simply Good Foods Company is a consumer packaged food and beverage company focused on nutritious snacking, marketing products under Quest, Atkins, and OWYN brands[25](index=25&type=chunk)[27](index=27&type=chunk)[98](index=98&type=chunk) - The company completed the acquisition of Only What You Need, Inc. (OWYN), a plant-based protein food company, on June 13, 2024, for approximately **$280.0 million**, expanding its wellness platform[26](index=26&type=chunk)[36](index=36&type=chunk)[99](index=99&type=chunk) - Products are distributed primarily in North America through grocery, club, mass merchandise, e-commerce, convenience, and specialty channels[27](index=27&type=chunk)[100](index=100&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=11&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - The company is evaluating the impact of recently issued accounting pronouncements: ASU No. 2023-07 (Segment Reporting), ASU No. 2023-09 (Income Taxes), and ASU No. 2024-03 (Expense Disaggregation Disclosures), which are effective for fiscal years beginning after December 2023, 2024, and 2026, respectively[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) [Note 3. Business Combination](index=11&type=section&id=3.%20Business%20Combination) - The OWYN Acquisition was completed on June 13, 2024, for a cash purchase price of **$281.9 million**, funded by **$250.0 million** in incremental borrowings and cash on hand. Total net consideration paid was **$280.2 million** as of May 31, 2025, after a **$1.7 million** post-closing escrow release[36](index=36&type=chunk)[37](index=37&type=chunk)[147](index=147&type=chunk) Preliminary Purchase Price Allocation of OWYN Acquisition (June 13, 2024) | Assets Acquired / Liabilities Assumed (in thousands) | Fair Value | | :------------------------------------------------- | :--------- | | Cash and cash equivalents | $1,476 | | Accounts receivable, net | $14,214 | | Inventories | $38,955 | | Intangible assets, net | $243,626 | | Goodwill | $46,840 | | Deferred tax liability | $(41,513) | | Total assets acquired and liabilities assumed | $280,172 | OWYN Net Sales Included in Company Results (in thousands) | Period | Net Sales | | :-------------------- | :-------- | | Thirteen Weeks Ended May 31, 2025 | $33,551 | | Thirty-Nine Weeks Ended May 31, 2025 | $99,611 | [Note 4. Revenue Recognition](index=13&type=section&id=4.%20Revenue%20Recognition) Net Sales by Brand and Geographic Area (Thirteen Weeks Ended) | Brand/Region (in thousands) | May 31, 2025 | May 25, 2024 | Change (YoY) | | :-------------------------- | :----------- | :----------- | :----------- | | Atkins | $112,287 | $128,602 | -12.69% | | Quest | $227,737 | $198,096 | +14.96% | | OWYN | $33,551 | — | N/A | | Total North America | $373,575 | $326,698 | +14.35% | | International | $7,381 | $8,059 | -8.35% | | Total Net Sales | $380,956 | $334,757 | +13.80% | Net Sales by Brand and Geographic Area (Thirty-Nine Weeks Ended) | Brand/Region (in thousands) | May 31, 2025 | May 25, 2024 | Change (YoY) | | :-------------------------- | :----------- | :----------- | :----------- | | Atkins | $329,105 | $370,855 | -11.39% | | Quest | $630,445 | $560,433 | +12.49% | | OWYN | $99,611 | — | N/A | | Total North America | $1,059,161 | $931,288 | +13.73% | | International | $22,718 | $24,346 | -6.77% | | Total Net Sales | $1,081,879 | $955,634 | +13.21% | [Note 5. Goodwill and Intangibles](index=14&type=section&id=5.%20Goodwill%20and%20Intangibles) Goodwill Balance (in thousands) | Metric | Amount | | :-------------------- | :----- | | Balance as of August 31, 2024 | $591,687 | | Acquisition of business | $(1,713) | | Balance as of May 31, 2025 | $589,974 | - The change in Goodwill is primarily due to the OWYN Acquisition, with no impairment charges recorded during the period[52](index=52&type=chunk) Intangible Assets, Net (in thousands) | Intangible Asset Category | May 31, 2025 Net Carrying Amount | August 31, 2024 Net Carrying Amount | | :------------------------ | :------------------------------- | :---------------------------------- | | Brands and trademarks | $1,197,000 | $1,197,000 | | Customer relationships | $119,604 | $129,329 | | Licensing agreements | $8,147 | $9,585 | | Software and website development costs | $87 | $113 | | Intangible assets in progress | $1,115 | $439 | | Total Intangible Assets, Net | $1,325,953 | $1,336,466 | - Amortization expense for intangible assets was **$11.2 million** for the thirty-nine weeks ended May 31, 2025, down from **$11.4 million** in the prior year period[53](index=53&type=chunk) [Note 6. Long-Term Debt and Line of Credit](index=15&type=section&id=6.%20Long-Term%20Debt%20and%20Line%20of%20Credit) - The company increased its Term Facility by **$250.0 million** on June 13, 2024, to partially finance the OWYN Acquisition, and further reduced the interest rate on January 31, 2025, through the 2025 Repricing Amendment[60](index=60&type=chunk)[61](index=61&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) Long-Term Debt (in thousands) | Metric | May 31, 2025 | August 31, 2024 | | :-------------------- | :----------- | :-------------- | | Term Facility (outstanding) | $250,000 | $400,000 | | Long-term debt, net of deferred financing fees | $248,920 | $397,485 | - The company was in compliance with all debt covenants as of May 31, 2025, and August 31, 2024. The Term Facility matures in March 2027, with no principal payments required in the next twelve months[65](index=65&type=chunk)[66](index=66&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk) [Note 7. Fair Value of Financial Instruments](index=16&type=section&id=7.%20Fair%20Value%20of%20Financial%20Instruments) - The company defines fair value using a three-tier hierarchy (Level 1, 2, 3) based on input observability. As of May 31, 2025, the book value of the company's debt approximated fair value, classified as Level 2[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) [Note 8. Income Taxes](index=17&type=section&id=8.%20Income%20Taxes) Income Tax Data (Thirty-Nine Weeks Ended) | Metric (in thousands) | May 31, 2025 | May 25, 2024 | | :-------------------- | :----------- | :----------- | | Income before income taxes | $151,395 | $145,213 | | Provision for income taxes | $35,424 | $35,195 | | Effective tax rate | 23.4% | 24.2% | - The effective tax rate decreased by **0.8%** for the thirty-nine weeks ended May 31, 2025, primarily due to permanent differences, mainly stock-based compensation[72](index=72&type=chunk) [Note 9. Leases](index=17&type=section&id=9.%20Leases) Total Lease Cost (in thousands) | Period | Thirteen Weeks Ended May 31, 2025 | Thirty-Nine Weeks Ended May 31, 2025 | | :-------------------- | :-------------------------------- | :----------------------------------- | | Total Operating Lease Cost | $3,416 | $9,893 | | Total Finance Lease Cost | $0 | $0 | | Total Lease Cost | $3,416 | $9,893 | Lease Liabilities and Assets (in thousands) | Metric | May 31, 2025 | August 31, 2024 | | :-------------------- | :----------- | :-------------- | | Operating lease right-of-use assets | $45,785 | $35,097 | | Total lease liabilities | $55,813 | $39,824 | - The weighted-average remaining lease term for operating leases was **6.58 years** as of May 31, 2025, with a weighted-average discount rate of **6.0%**[74](index=74&type=chunk) [Note 10. Commitments and Contingencies](index=18&type=section&id=10.%20Commitments%20and%20Contingencies) - The company is not currently a party to any material litigation or aware of any pending or threatened litigation that could have a material adverse effect on its business[75](index=75&type=chunk)[165](index=165&type=chunk) - Future payments for endorsement contracts with celebrity figures and social media influencers are estimated at **$1.8 million** over the next year as of May 31, 2025[76](index=76&type=chunk) [Note 11. Stockholders' Equity](index=19&type=section&id=11.%20Stockholders'%20Equity) - The company repurchased **693,375 shares** of common stock at an average price of **$35.10** per share during the thirteen and thirty-nine weeks ended May 31, 2025[78](index=78&type=chunk)[149](index=149&type=chunk) - As of May 31, 2025, approximately **$47.2 million** remained available under the **$150.0 million** stock repurchase program, which has no expiration date[78](index=78&type=chunk)[150](index=150&type=chunk)[173](index=173&type=chunk) [Note 12. Earnings Per Share](index=19&type=section&id=12.%20Earnings%20Per%20Share) Earnings Per Share (Thirteen Weeks Ended) | Metric | May 31, 2025 | May 25, 2024 | | :-------------------- | :----------- | :----------- | | Basic EPS | $0.41 | $0.41 | | Diluted EPS | $0.40 | $0.41 | | Basic Weighted Average Shares | 100,923,690 | 100,024,230 | | Diluted Weighted Average Shares | 101,635,521 | 101,270,163 | Earnings Per Share (Thirty-Nine Weeks Ended) | Metric | May 31, 2025 | May 25, 2024 | | :-------------------- | :----------- | :----------- | | Basic EPS | $1.15 | $1.10 | | Diluted EPS | $1.14 | $1.09 | | Basic Weighted Average Shares | 100,787,087 | 99,852,203 | | Diluted Weighted Average Shares | 101,669,998 | 101,240,471 | [Note 13. Omnibus Incentive Plan](index=20&type=section&id=13.%20Omnibus%20Incentive%20Plan) - Stock-based compensation expense was **$4.0 million** for the thirteen weeks ended May 31, 2025, and **$12.8 million** for the thirty-nine weeks ended May 31, 2025[84](index=84&type=chunk) Stock Option Activity (Thirty-Nine Weeks Ended May 31, 2025) | Metric | Shares Underlying Options | Weighted Average Exercise Price | | :------------------------ | :------------------------------ | :------------------------------ | | Outstanding as of August 31, 2024 | 2,410,567 | $20.75 | | Granted | 34,035 | $36.49 | | Exercised | (868,665) | $13.76 | | Forfeited | (19,694) | $40.07 | | Outstanding as of May 31, 2025 | 1,556,243 | $24.75 | - As of May 31, 2025, unrecognized compensation cost for stock options was **$1.6 million** (over **1.1 years**), for restricted stock units was **$16.6 million** (over **1.8 years**), and for performance stock units was **$6.4 million** (over **1.5 years**)[85](index=85&type=chunk)[86](index=86&type=chunk)[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and liquidity, highlighting key business trends, the impact of the OWYN acquisition, and a detailed comparison of financial results for the thirteen and thirty-nine weeks ended May 31, 2025, versus the prior year. It also includes a reconciliation of non-GAAP measures like EBITDA and Adjusted EBITDA [Overview](index=23&type=section&id=Overview) - The Simply Good Foods Company is a consumer packaged food and beverage company focused on nutritious snacking, with brands Quest, Atkins, and OWYN, aiming for innovation, organic growth, and acquisitions[98](index=98&type=chunk)[100](index=100&type=chunk) - The acquisition of OWYN, a plant-based protein food company, was completed in June 2024 for approximately **$280.0 million**, expanding the company's product offerings[99](index=99&type=chunk)[146](index=146&type=chunk) [Business Trends](index=24&type=section&id=Business%20Trends) - Business performance improved due to the OWYN Acquisition and Quest volume growth, offsetting continued softness in Atkins. Fiscal year 2025 organic sales growth is expected to be volume-driven, supported by advertising, marketing, innovation, and promotions[101](index=101&type=chunk) - The company is monitoring macroeconomic trends like consumer uncertainty, ingredient inflation, supply chain challenges, and tariffs, which could impact net sales and profitability, but current performance is in line with fiscal year 2025 expectations[102](index=102&type=chunk) [Key Financial Definitions](index=24&type=section&id=Key%20Financial%20Definitions) - Net sales are product sales less promotional activities, slotting fees, and other adjustments[103](index=103&type=chunk) - Cost of goods sold includes costs paid to contract manufacturers for raw ingredients, packaging, shipping, warehousing, and tolling charges[104](index=104&type=chunk) - Operating expenses comprise selling and marketing, general and administrative, depreciation and amortization, and business transaction costs[105](index=105&type=chunk)[107](index=107&type=chunk) [Results of Operations (Thirteen Weeks Ended May 31, 2025, and May 25, 2024)](index=25&type=section&id=Comparison%20of%20Unaudited%20Results%20for%20the%20Thirteen%20Weeks%20Ended%20May%2031%2C%202025%2C%20and%20the%20Thirteen%20Weeks%20Ended%20May%2025%2C%202024) Thirteen Weeks Ended Financial Performance (YoY Change) | Metric (in thousands) | May 31, 2025 | May 25, 2024 | Change ($) | Change (%) | | :-------------------- | :----------- | :----------- | :--------- | :--------- | | Net Sales | $380,956 | $334,757 | $46,199 | +13.8% | | Cost of Goods Sold | $242,437 | $201,131 | $41,306 | +20.5% | | Gross Profit | $138,519 | $133,626 | $4,893 | +3.7% | | Gross Profit Margin | 36.4% | 39.9% | -3.5% | -350 bps | | Operating Expenses | $79,199 | $74,852 | $4,347 | +5.8% | | Income from Operations | $59,320 | $58,774 | $546 | +0.9% | | Net Income | $41,102 | $41,334 | $(232) | -0.6% | | Adjusted EBITDA | $73,854 | $71,874 | $1,980 | +2.8% | - Net sales increased by **13.8%** primarily due to the OWYN Acquisition and Quest volume growth, despite softness in Atkins. North America net sales increased **14.3%**, while International net sales decreased by **$0.7 million**[108](index=108&type=chunk) - Gross profit margin decreased by **350 basis points** to **36.4%**, mainly due to unfavorable commodity expenses and lower gross profit margins from the OWYN business[110](index=110&type=chunk) - General and administrative expenses increased by **30.7%** due to **$5.2 million** in integration costs and **$3.2 million** in employee-related costs from OWYN, plus higher corporate expenses[118](index=118&type=chunk) [Results of Operations (Thirty-Nine Weeks Ended May 31, 2025, and May 25, 2024)](index=27&type=section&id=Comparison%20of%20Unaudited%20Results%20for%20the%20Thirty-Nine%20Weeks%20Ended%20May%2031%2C%202025%2C%20and%20the%20Thirty-Nine%20Weeks%20Ended%20May%2025%2C%202024) Thirty-Nine Weeks Ended Financial Performance (YoY Change) | Metric (in thousands) | May 31, 2025 | May 25, 2024 | Change ($) | Change (%) | | :-------------------- | :----------- | :----------- | :--------- | :--------- | | Net Sales | $1,081,879 | $955,634 | $126,245 | +13.2% | | Cost of Goods Sold | $682,737 | $590,020 | $92,717 | +15.7% | | Gross Profit | $399,142 | $365,614 | $33,528 | +9.2% | | Gross Profit Margin | 36.9% | 38.3% | -1.4% | -140 bps | | Operating Expenses | $230,476 | $206,937 | $23,539 | +11.4% | | Income from Operations | $168,666 | $158,677 | $9,989 | +6.3% | | Net Income | $115,971 | $110,018 | $5,953 | +5.4% | | Adjusted EBITDA | $211,923 | $191,679 | $20,244 | +10.6% | - Net sales increased by **13.2%** driven by the OWYN Acquisition and Quest volume growth, partially offset by Atkins' softness. North America net sales increased **13.7%**, while International net sales decreased by **$1.6 million**[119](index=119&type=chunk) - Gross profit margin decreased by **140 basis points** to **36.9%**, primarily due to lower gross profit margins of the OWYN business, partially offset by favorable commodity expenses[121](index=121&type=chunk) - General and administrative expenses increased by **30.4%** due to **$12.1 million** in integration costs and **$9.2 million** in employee-related costs from OWYN, and higher corporate expenses[129](index=129&type=chunk) [Reconciliation of EBITDA and Adjusted EBITDA](index=29&type=section&id=Reconciliation%20of%20EBITDA%20and%20Adjusted%20EBITDA) - EBITDA and Adjusted EBITDA are non-GAAP measures used by management to reflect ongoing operations and provide additional information to investors, excluding items not directly attributable to underlying operating performance[130](index=130&type=chunk) EBITDA and Adjusted EBITDA Reconciliation (Thirteen Weeks Ended) | Metric (in thousands) | May 31, 2025 | May 25, 2024 | | :-------------------- | :----------- | :----------- | | Net income | $41,102 | $41,334 | | EBITDA | $64,314 | $63,943 | | Adjusted EBITDA | $73,854 | $71,874 | EBITDA and Adjusted EBITDA Reconciliation (Thirty-Nine Weeks Ended) | Metric (in thousands) | May 31, 2025 | May 25, 2024 | | :-------------------- | :----------- | :----------- | | Net income | $115,971 | $110,018 | | EBITDA | $183,824 | $174,847 | | Adjusted EBITDA | $211,923 | $191,679 | [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) - The company had **$98.0 million** in cash as of May 31, 2025, and believes its liquidity and capital sources are sufficient for operations and growth for at least the next twelve months[133](index=133&type=chunk) - The OWYN Acquisition was funded by **$250.0 million** in incremental borrowings under the Term Facility and cash on hand, with the Term Facility balance at **$250.0 million** as of May 31, 2025, maturing in March 2027[145](index=145&type=chunk)[147](index=147&type=chunk) - The company repurchased **693,375 shares** of common stock for **$24.3 million** during the period, with **$47.2 million** remaining available under its **$150.0 million** stock repurchase program[149](index=149&type=chunk)[150](index=150&type=chunk) [Cash Flows](index=32&type=section&id=Cash%20Flows) Cash Flow Summary (Thirty-Nine Weeks Ended) | Cash Flow Activity (in thousands) | May 31, 2025 | May 25, 2024 | Change | | :-------------------------------- | :----------- | :----------- | :----- | | Net cash provided by operating activities | $133,087 | $166,755 | $(33,668) | | Net cash used in investing activities | $(2,192) | $(2,345) | $153 | | Net cash used in financing activities | $(165,206) | $(43,569) | $(121,637) | - Operating cash flow decreased by **$33.7 million**, primarily due to a **$36.7 million** negative swing in working capital, driven by inventory building and the OWYN Acquisition[152](index=152&type=chunk) - Financing cash flow saw a significant increase in usage, primarily due to **$150.0 million** in Term Facility principal payments and **$24.3 million** in common stock repurchases[154](index=154&type=chunk) [New Accounting Pronouncements](index=32&type=section&id=New%20Accounting%20Pronouncements) - The company refers to Note 2, Summary of Significant Accounting Policies, for information regarding recently issued accounting standards[155](index=155&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) There were no material changes in the company's market risk exposure during the thirteen-week period ended May 31, 2025 - No material changes in market risk exposure occurred during the thirteen-week period ended May 31, 2025[156](index=156&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of May 31, 2025. The assessment scope excluded the recently acquired OWYN business, which accounted for 15% of total assets and 9% of net sales, consistent with SEC guidance for new acquisitions - Disclosure controls and procedures were deemed effective as of May 31, 2025, by the CEO and CFO[158](index=158&type=chunk) - The assessment of disclosure controls excluded the OWYN Acquisition, which represented **15%** of total assets and **9%** of total net sales, in line with SEC guidance for recently acquired businesses[159](index=159&type=chunk) - New processes and controls are being implemented for OWYN's internal control over financial reporting following the acquisition[160](index=160&type=chunk) PART II. Other Information [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings and is unaware of any pending or threatened litigation that could significantly impact its business, operating results, financial condition, or cash flows - The company is not a party to any material litigation and is unaware of any pending or threatened litigation that could materially adversely affect its business[165](index=165&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) The primary risk factor highlighted is the volatility of ingredient and packaging costs, which can significantly rise due to global competition, currency fluctuations, weather, climate change, geopolitical events, and tariffs. These cost increases may negatively affect profitability if not offset by price increases or cost savings, potentially reducing sales volume - Ingredient and packaging costs are volatile and may rise significantly due to factors like global competition, currency fluctuations, weather, climate change, geopolitical events, and tariffs, potentially affecting profitability[167](index=167&type=chunk)[168](index=168&type=chunk) - Attempts to offset cost pressures through price increases or cost savings may not be successful and could lead to reductions in sales volume or profitability[169](index=169&type=chunk) - The company does not use hedges for core ingredient or packaging availability, making it vulnerable to upward price movements that could negatively impact margins if costs cannot be passed on or efficiencies found[170](index=170&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 693,375 shares of common stock at an average price of $35.10 per share during the three months ended May 31, 2025. As of May 31, 2025, approximately $47.2 million remained available under the $150.0 million stock repurchase program Issuer Purchases of Equity Securities (March 2, 2025 - May 31, 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Maximum Dollar Value Remaining (in thousands) | | :-------------------------- | :--------------------- | :--------------------------- | :-------------------------------------------- | | March 2, 2025 - March 29, 2025 | 38,586 | $33.01 | $70,272.9 | | March 30, 2025 - April 26, 2025 | 92,902 | $32.96 | $67,211.0 | | April 27, 2025 - May 31, 2025 | 561,887 | $35.60 | $47,209.4 | | Total | 693,375 | $35.10 | $47,209.4 | - Approximately **$47.2 million** remained available under the **$150.0 million** stock repurchase program as of May 31, 2025[173](index=173&type=chunk) [Item 3. Defaults Upon Senior Securities](index=35&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities were reported[174](index=174&type=chunk) [Item 4. Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[175](index=175&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" during the three months ended May 31, 2025 - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended May 31, 2025[176](index=176&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Third Amended and Restated Executive Severance Plan, certifications from the Principal Executive Officer and Principal Financial Officer, and XBRL-related documents - Exhibits include the Third Amended and Restated Executive Severance Plan, Section 302 and 906 certifications, and XBRL documents[177](index=177&type=chunk)

Financial Data and Key Metrics Changes - Simply Good Foods reported Q3 net sales of $381 million, an increase of 13.8% year over year, driven by the acquisition of Owen and 3.8% organic growth [21][22] - Adjusted EBITDA for the quarter was $73.9 million, up 2.8% from the previous year, while net income was $41.1 million, slightly down from $41.3 million last year [23][24] - Gross margin declined to 36.4%, a decrease of 350 basis points year over year, primarily due to elevated input costs [22][24] Business Line Data and Key Metrics Changes - Quest, representing approximately 60% of net sales, achieved 11% consumption growth in Q3, with household penetration increasing by 120 basis points to 18.3% [11][21] - Atkins experienced a decline in consumption of 13% in Q3, attributed to distribution losses and the absence of high-volume merchandising events from the previous year [14][15] - Owen's retail takeaway grew by 24% in Q3, with ready-to-drink shakes seeing over 20% growth [17][21] Market Data and Key Metrics Changes - The nutritional snacking category continued to show robust growth, with overall consumption up double digits, reflecting a shift towards high protein, low sugar, and low carb options [7][19] - The company noted that Quest and Owen together account for approximately 70% of net sales, indicating strong market positioning [19][20] Company Strategy and Development Direction - Simply Good Foods aims to lead the generational shift towards healthier food options through innovation, expanding physical availability, and increasing brand awareness [19][20] - The company is focusing on optimizing the Atkins brand by reducing lower-velocity SKUs and enhancing the core product offerings [15][16] - There is a commitment to driving growth in the Salty Snacks platform, which saw a 31% increase in retail takeaway [12][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged inflationary pressures impacting margins, particularly from cocoa and whey, and emphasized ongoing productivity and cost management efforts [8][9] - The outlook for the full year has been tightened, with expectations for net sales growth of 8.5% to 9.5% and adjusted EBITDA growth of 4% to 5% [28][30] - Management expressed confidence in the long-term growth potential of Quest and Owen, despite anticipated challenges with Atkins [19][20] Other Important Information - The company has repaid nearly all of the $250 million borrowed for the acquisition of Owen and has repurchased over $24 million worth of common stock [10][27] - The company is actively evaluating pricing strategies to address high input costs and maintain gross margins [96] Q&A Session Summary Question: Distribution expectations for Atkins and impact on sales - Management expects continued double-digit declines for Atkins due to distribution cuts but anticipates offsetting gains from Quest and Owen [36][39] Question: Performance expectations for Owen - Management remains confident in Owen's growth potential, expecting similar consumption trends to continue into FY 2026 [44][47] Question: Gross margin outlook and pricing strategies - Management indicated that gross margins are under pressure but are working on productivity and pricing actions to recover costs [65][68] Question: Capital allocation priorities - The company prioritizes M&A, debt repayment, and share buybacks as part of its capital allocation strategy [98][99] Question: Impact of Texas legislation on product portfolio - Management believes the impact of new regulations will be minimal, with only a few SKUs requiring reformulation [108][109]

Financial Data and Key Metrics Changes - Total net sales for Q3 2025 reached $381 million, an increase of 13.8% year over year, driven by Owen's contribution of $33.6 million or 10%, alongside 3.8% organic growth [23] - Adjusted EBITDA for the quarter was $73.9 million, reflecting a 2.8% increase from the previous year [25] - Gross profit increased to $138.5 million, a 3.7% rise from the year-ago period, but gross margin declined to 36.4%, down 350 basis points due to elevated input costs [24][25] - Reported EPS was $0.40 per diluted share, compared to $0.41 in Q3 last year, while adjusted diluted EPS increased to $0.51 from $0.50 [26] Business Line Data and Key Metrics Changes - Quest, representing approximately 60% of net sales, achieved 11% consumption growth in Q3, with household penetration increasing by 120 basis points to 18.3% [11] - Atkins experienced a 12.7% decline in net sales, attributed to distribution losses and the absence of high-volume merchandising events from the previous year [23][15] - Owen's retail takeaway grew by 24% in Q3, with ready-to-drink shakes seeing over 20% growth [18] Market Data and Key Metrics Changes - The nutritional snacking category continued to show robust growth, with overall consumption up double digits, reflecting a shift towards high protein, low sugar, and low carb options [8] - Quest's Salty Snacks platform saw retail takeaway grow by 31% in Q3, indicating strong market demand [12] Company Strategy and Development Direction - The company aims to optimize the Atkins brand by focusing on high-velocity SKUs and reducing lower-performing products, while continuing to support Quest and Owen's growth [16][18] - Simply Good Foods is positioned as a leader in the nutritional snacking category, focusing on innovation, expanding distribution, and increasing brand awareness [20][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged inflationary pressures impacting margins, particularly from cocoa and whey, and emphasized ongoing productivity and cost management efforts [9][10] - The company expects to generate approximately 3% organic growth and mid-single-digit total adjusted EBITDA growth for the fiscal year [10] Other Important Information - The company has repaid $240 million of the $250 million borrowed for the acquisition of Owen, with a current leverage ratio of approximately 0.5 times [10][27] - Cash flow from operations for the fiscal year to date was $133 million, down from $167 million the previous year due to higher working capital needs [27] Q&A Session Summary Question: Distribution expectations for Atkins and impact on sales - Management expects continued double-digit declines for Atkins due to distribution cuts, but is proactively addressing these challenges with retailers [38][40] Question: Performance expectations for Owen - Management remains confident in Owen's growth potential, anticipating similar consumption trends as seen in Q3 [46][50] Question: Gross margin outlook and pricing strategy - Management is evaluating additional pricing actions to recover costs and support gross margins, which are currently under pressure [97][70] Question: Capital allocation priorities - The company prioritizes M&A, debt repayment, and share buybacks as part of its capital allocation strategy [99][100] Question: Impact of Texas legislation on product portfolio - Management believes the impact of new regulations will be minimal, with only a few SKUs requiring reformulation [110]