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 Performance - Q3 reported net sales increased by 13.8% year-over-year to $381 million, driven by the OWYN acquisition and 3.8% organic net sales growth[9, 31] - Fiscal year-to-date reported net sales increased by 13.2% year-over-year to $1,081.9 million, with OWYN contributing $99.6 million, or 10.4% to the growth[31] - Q3 Adjusted EBITDA grew by 2.8% year-over-year, while net income decreased slightly by 0.6% to $41.1 million[10, 34] - Fiscal year-to-date Adjusted EBITDA grew by 10.6% year-over-year, and net income increased by 5.4% to $116 million[11, 38] - The company's leverage improved to 0.5x, driven by Adjusted EBITDA growth and strong cash flow generation[11] Brand Performance - Quest retail takeaway grew by 11%, with household penetration increasing by 120 bps to 18.3%[9, 13] - OWYN Q3 retail takeaway grew by 24%, with balanced growth across channels, including MULO+C (+26%) and e-commerce (+19%)[9, 24, 25] - Atkins Q3 retail takeaway declined by 13%, primarily due to distribution losses[9, 23] Outlook and Strategy - Fiscal Year 2025 net sales for OWYN are expected to be $145 million[25] - The company expects Fiscal Year 2025 retail takeaway to increase low double-digits for Quest and decline low double digits for Atkins[17, 23] - The company is updating its Fiscal Year 2025 outlook, expecting net sales growth in the 8.5% to 9.5% range[10, 47]

Core Insights - Simply Good Foods Company reported a 14% increase in net sales for the third quarter of fiscal year 2025, with organic net sales growth of approximately 4% [2][3] - The acquisition of Only What You Need, Inc. (OWYN) contributed significantly to the sales growth, with OWYN net sales accounting for 10% of the total reported net sales growth [3][8] - The company expects to generate approximately 3% organic net sales growth and mid-single-digit Adjusted EBITDA growth for the full fiscal year 2025 [2][17] Financial Performance - Net sales for the third quarter reached $381.0 million, an increase of $46.2 million or 13.8% compared to the previous year [3][14] - Gross profit increased to $138.5 million, reflecting a 3.7% rise year-over-year, although gross margin decreased by 350 basis points to 36.4% due to inflationary pressures [4][10] - Operating expenses rose to $79.2 million, with general and administrative expenses increasing significantly due to the inclusion of OWYN [5][11] Earnings Metrics - Net income for the third quarter was $41.1 million, a slight decrease of 0.6% from $41.3 million in the prior year [6][14] - Adjusted EBITDA for the quarter was $73.9 million, up 2.8% from $71.9 million year-over-year [6][13] - Adjusted diluted EPS was reported at $0.51, compared to $0.50 in the same period last year [7][45] Year-to-Date Performance - Year-to-date net sales reached $1,081.9 million, a 13.2% increase from the previous year, with OWYN contributing $99.6 million [8][14] - The company experienced a decline in international organic net sales, down $1.6 million compared to the prior year [8] Market Position and Strategy - Simply Good Foods is positioned as a leader in the nutritional snacking category, focusing on high-protein, low-sugar, and low-carb products [2][27] - The company aims to enhance growth through innovation, increased product availability, and effective marketing strategies [2][17] - The company anticipates continued challenges from inflation and tariffs but is implementing productivity and cost-saving measures to support long-term growth [2][17]

Financial Performance - Q2 net sales increased by 152% year-over-year to $3597 million, driven by 44% organic growth and the OWYN acquisition[9, 28] - First half net sales increased 129% year-over-year to $7009 million[28] - Q2 Adjusted EBITDA grew 176% year-over-year[10, 31] - Q2 Net Income increased 109% year-over-year to $367 million[10, 31] - The company reaffirms fiscal year 2025 outlook, expecting net sales growth in the 85% to 105% range year-over-year and Adjusted EBITDA growth in the 4% to 6% range year-over-year[9, 38] Brand Performance - Quest Q2 retail takeaway grew 13%[11] - OWYN Q2 retail takeaway grew 52%, with robust growth across channels[20, 21] - Atkins Q2 retail takeaway declined 10%, attributed to reduced displays and lost club distribution[19] Outlook and Strategy - Fiscal year 2025 net sales for OWYN are expected to be in the $140-$150 million range[21, 38] - The company expects Quest to approach net sales of $1 billion and remains confident in multi-year runway for growth[13] - The company plans to invest behind attractive opportunities, enabling sustainable growth and creating meaningful shareholder value[25]

Core Viewpoint - The Simply Good Foods Company reported strong financial results for the second quarter and reaffirmed its fiscal year 2025 outlook, highlighting growth driven by the OWYN acquisition and organic sales growth in its existing brands [2][21][27]. Financial Performance - Net sales increased by $47.5 million, or 15.2%, to $359.7 million for the second quarter, with OWYN contributing $33.8 million to this growth [3][16]. - Adjusted EBITDA grew by 18% year-over-year, reaching $68.0 million, benefiting from favorable commodity prices and strong cost discipline [2][8]. - Net income for the second quarter was $36.7 million, a 10.9% increase from $33.1 million in the prior year [7][8]. Sales Growth - Retail takeaway for Simply Good Foods increased by approximately 7%, with Quest and OWYN showing point-of-sale growth of about 13% and 52%, respectively [4][11]. - Organic net sales grew by 4.4%, primarily driven by the Quest brand, while international organic net sales declined by $2.1 million [3][10]. Operating Expenses - Operating expenses rose to $75.4 million, an increase of $6.6 million compared to the previous year, largely due to the inclusion of OWYN [6][13]. - General and administrative expenses increased by $6.1 million, driven by the OWYN acquisition, with integration costs contributing to this rise [6][13]. Outlook - The company expects net sales to increase by 8.5% to 10.5% for fiscal year 2025, with adjusted EBITDA anticipated to grow by 4% to 6% [7][22]. - The outlook incorporates a headwind of approximately 2 percentage points due to the fifty-third week in fiscal year 2024 [7][27]. Balance Sheet and Cash Flow - As of March 1, 2025, the company had cash of $103.7 million and an outstanding term loan balance of $300 million, having repaid $50 million during the quarter [18][53]. - Cash flow from operations was approximately $63.3 million, down from $94 million in the prior year, primarily due to lower net working capital [18][41]. Acquisition Impact - The acquisition of OWYN, completed on June 13, 2024, is a significant factor in the company's growth, contributing to both net sales and adjusted EBITDA [1][27]. - OWYN's expected net sales for fiscal year 2025 are projected to be in the range of $140-150 million [27]. Management Changes - The company announced a succession plan for its Chief Financial Officer, with Shaun Mara set to retire on July 3, 2025, and Christopher J. Bealer appointed as his successor [20].