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]

Financial Data and Key Metrics Changes - Total net sales for Simply Good Foods in Q2 2025 reached $359.7 million, reflecting a 15.2% increase year-over-year, driven by the contribution from Owen and organic growth [44][45] - Adjusted EBITDA increased by 17.6% to $68 million, with net income growing by 10.9% to $36.7 million [48][49] - Gross margin was reported at 36.2%, a decline of 120 basis points compared to the previous year, influenced by the inclusion of Owen and inflationary pressures [46][54] Business Line Data and Key Metrics Changes - Quest's net sales grew by 16.5% in Q2, representing 60% of the company's net sales, while Atkins saw a decline of 11.5% due to lower consumption and lost distribution [44][28] - Owen experienced a retail takeaway increase of 52%, with ready-to-drink shakes growing by 53% [36][44] Market Data and Key Metrics Changes - The nutritional snacking category grew by 12% in Q2, marking the 16th consecutive quarter of growth [16] - Quest's retail takeaway increased by 13%, while Atkins faced a decline in consumption [22][28] Company Strategy and Development Direction - The company aims to lead the nutritional snacking category by focusing on innovation, expanding physical availability, and increasing brand awareness [19][20][41] - The strategy includes shifting focus from Atkins to faster-growing brands like Quest and Owen, with plans to optimize SKU distribution [30][64] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the dynamic and uncertain consumer environment but expressed confidence in the company's positioning within the high-protein, low-sugar market [41][42] - The outlook for fiscal year 2025 includes a projected net sales increase of 8.5% to 10.5%, with adjusted EBITDA expected to grow by 4% to 6% [54][56] Other Important Information - The company is undergoing a leadership transition with the retirement of CFO Sean Mara and the appointment of Chris Beeler as his successor [10][12] - The integration of Owen is progressing well, with expectations for synergy capture starting in fiscal 2026 [40] Q&A Session Summary Question: What is driving the reduction in sales guidance for Atkins? - Management noted that the reduction is due to lost display space and distribution at a key customer, which was anticipated [60][64] Question: What prompted the relaunch of Quest shakes? - The relaunch was driven by the need to meet consumer demand for indulgent, high-protein options, with a focus on flipping the macros of traditional shakes [71][75] Question: How does the company plan to build awareness for Owen? - The initial focus will be on expanding distribution, with marketing efforts to follow once a solid distribution footprint is established [120] Question: What are the expectations for the bar category, specifically for Quest? - Management acknowledged the need for continuous innovation in the bar category and expressed optimism about upcoming product launches [124][125]