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• Net Sales: $359.7 million, increased 15.2% year-over-year.

• Quest Net Sales Growth: 16.5% in the quarter.

• Atkins Net Sales Decline: 11.5% due to lower consumption and trade inventory reduction.

• OWYN Retail Takeaway Growth: 52% in the quarter.

• Gross Profit: $130.1 million, up 11.4% from the previous year.

• Gross Margin: 36.2%, a decline of 120 basis points.

• Adjusted EBITDA: $68 million, increased 17.6% year-over-year.

• Net Income: $36.7 million, reflecting 10.9% growth.

• Adjusted Diluted EPS: $0.46 compared to $0.40 in the prior year period.

• Cash Flow from Operations: $63.3 million fiscal year-to-date.

• Term Loan Repayment: $50 million repaid during the quarter, $100 million repaid since fiscal year start.

• Fiscal Year 2025 Net Sales Outlook: Expected to increase 8.5% to 10.5%.

• OWYN Net Sales Outlook: Expected to be in the $140 million to $150 million range.

• Adjusted EBITDA Growth Outlook: Expected to increase 4% to 6%.

• Gross Margin Outlook: Expected to be down approximately 200 basis points for the year.

• Warning! GuruFocus has detected 1 Warning Sign with SMPL.

Release Date: April 09, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• The Simply Good Foods Co (NASDAQ:SMPL) reported a 15% increase in net sales for the quarter, driven by strong performance from Quest and OWYN brands.

• Quest, which now represents 60% of the company's net sales, achieved a 13% increase in retail takeaway, with significant growth in its salty snacks platform.

• OWYN experienced a 52% increase in retail takeaway, with ready-to-drink shakes growing 53% and distribution expanding by 22%.

• The company successfully integrated OWYN, with synergy capture expected to start in fiscal '26, contributing to adjusted EBITDA margin targets.

• The Simply Good Foods Co (NASDAQ:SMPL) maintained a strong balance sheet, with a net debt to trailing 12-month adjusted EBITDA ratio of 0.7 times, and has repaid $100 million of its term loan since the beginning of the fiscal year.

Negative Points

• Atkins brand experienced a 10% decline in consumption, with significant distribution losses at a key club customer impacting sales.

• The company expects continued declines for Atkins in the short to medium term due to reduced merchandising and distribution losses.

• Gross margin declined by 120 basis points, primarily due to the inclusion of OWYN and inflationary pressures on input costs.

• The company faces potential headwinds from tariffs, with an estimated impact of $5 million to $10 million on fiscal '25 results.

• Despite strong performance from Quest and OWYN, the overall growth is partially offset by the decline in Atkins, which represents 30% of net sales.