Q2 2025 Simply Good Foods Co Earnings Call Transcript
Key Points
- The Simply Good Foods Co (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 (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.
- 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.
Greetings, and welcome to the Simply Good Foods Company's fiscal year 2025 second quarter conference call. (Operator instructions) As a reminder, this conference is being recorded.
At this time, it is now my pleasure to introduce Josh Levine, Vice President of Investor Relations. Thank you, Josh. You may now begin.
Thank you, operator. Good morning, and welcome to the Simply Good Foods Company fiscal year 2025 second quarter earnings call for the 13 week period ended March 1, 2025. Today, Geoff Tanner, President and CEO; and Shaun Mara, CFO, will provide you with an overview of results, which will then be followed by a Q&A session. The company issued its earnings release this morning at approximately 7:00 AM Eastern Time.
A copy of the release and accompanying presentation are available on the investors section of the company's website at www.thesimplygoodfoodscompany.com.
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