The Simply Good Foods Company

Greetings. Welcome to Simply Good Foods Company's third quarter fiscal year 2025 earnings call. This time, all participants will be in listen-only mode. The question and answer session will follow today's formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. At this time, I'll turn the conference over to Joshua Levine, Vice President of Investor Relations. Joshua, you may begin.

Thank you, Operator. Good morning and welcome to the Simply Good Foods Company's third quarter fiscal year 2025 earnings call for the 13-week period ended May 31st, 2025. Today, Jeff Tanner, President and CEO, and Chris Beeler, CFO, will provide you with an overview of our results, which were provided in our earnings release issued earlier this morning at approximately 7 a.m. Eastern Time. Our prepared remarks will then be followed by a Q&A session. A copy of the release and accompanying presentation are available on the Investors section of the company's website at www.thesimplygoodfoodscompany.com. This call is being webcast, and an archive of today's remarks will be made available. During the course of today's call, management will make forward-looking statements which are subject to various risks and uncertainties that may cause actual results to differ materially. The company undertakes no obligation to update these statements based on subsequent events. A detailed listing of such risks and uncertainties can be found in today's press release and the company's SEC filings. Note that on today's call, we will refer to certain non-GAAP financial measures that we believe provide useful information for investors. Due to the company's asset-light, high cash flow business model, we evaluate our performance on an adjusted basis as it relates to EBITDA and diluted EPS. Please refer to today's press release for reconciliation of our non-GAAP financial measures to their most comparable measures prepared in accordance with GAAP. The acquisition of Only What You Need Inc., or OWEN, was completed on June 13, 2024. Therefore, the company's a year ago performance for the 13 weeks ended May 25, 2024 does not include results of the OWEN business. References during this call to Organic or Legacy Simply Good Foods refers to Simply Good Foods' business excluding OWEN. As we have now lapped the anniversary date of the Owen acquisition for future calls, the use of organic will refer to year-over-year growth for brands we have owned for more than 12 months. For Q4, that will include the growth of Simply Good Foods, excluding Owen for the first few weeks of the quarter, and growth for the entire company for the balance of the quarter. Finally, all retail takeaway data included in our discussion today, unless otherwise noted, is for the 13 weeks ended June 1, 2025 – and reflects a combination of CIRCON's NULO++-C and company estimates for unmeasured channels as compared to the prior year. I will now turn the call over to Jeff Tanner, President and CEO.

Thank you, Josh. Good morning, everyone, and thank you for joining us. I'll start by reviewing our Q3 performance before turning it over to our new CFO, Chris Beeler, who will discuss our financial results and our updated fiscal year 2025 outlook. We will then be available to take your questions. Momentum continued in Q3 with net sales up 14% year over year, driven by the acquisition of Owen and approximately 4% organic growth. Consumption was once again up double digits for both Quest and Owen, more than offsetting the anticipated declines for Atkins. As a reminder, Quest and Owen, in aggregate, make up approximately 70% of our net sales today. Growth for the nutritional snacking category remained robust in Q3, up double digits again, reflecting the continued mainstreaming of consumer demand for high-protein, low-sugar, and low-carb food and beverage options. Simply Good is at the forefront of this generational shift with an attractive portfolio of three uniquely positioned brands powered by leading sales and marketing capabilities and a talented R&D and supply chain teams. Adjusted EBITDA in the quarter grew approximately 3% year over year. While our margins remained strong overall, they were under pressure during the quarter as we realized higher levels of inflation, most notably from cocoa and whey. As we discussed on prior calls, we expected inflation to impact our margins as we moved into the second half. In response to these headwinds, we substantially stepped up our productivity and cost management efforts, and we've started to realize the contribution from pricing we've taken on select items. We expect to realize the full benefit of productivity and pricing actions over the next 12 to 18 months. Cash flow generation remains a hallmark of this organization. In the year since we acquired Owen, we have repaid essentially all of the $250 million we borrowed to finance the purchase. And during Q3, we repurchased over $24 million worth of our common stock. At only half a turn of leverage today, our balance sheet gives us optionality going forward. Finally, considering our top and bottom line performance year to date and trends to begin the fourth quarter, we are tightening our ranges for full year net sales and adjusted EBITDA. I want to commend our teams for the tenacity amidst the dynamic operating environment and delivering a year where we expect to generate approximately 3% organic growth, and mid-single-digit total adjusted EBITDA growth, as well as to successfully integrate OWIN. Turning to our largest brand, Quest, which represents approximately 60% of our net sales today, the brand delivered another quarter of double-digit retail takeaway and net sales growth. Consumption in Q3 grew 11%, with household penetration up 120 basis points, year over year to 18.3%. As Quest approaches a billion dollars in net sales, we see a long runway of opportunity driven by a framework for growth based on disruptive innovation, expanding physical availability, and increasing brand awareness. Our Salty Snacks platform embodies this strategy. Salty Snacks retail takeaway grew 31% this quarter and is on pace to become the largest platform on the Quest business. we continue to successfully launch exciting new flavors and sizes, expand distribution and merchandising in and out of our aisle, as well as in new channels, and we remain focused on building awareness through award-winning marketing. As we work to expand physical availability of chips, we're particularly excited about the support we're getting from retailers who see the growth and incrementality of the segment. As an example, at a large mass merchant, Quest recently secured incremental shelf space within our core aisle during their upcoming reset later this year. In addition, at the same customer, Quest gained multiple placements outside our aisle, including on their highly visible health and wellness wall, as well as near their heavily trafficked grocery section. Shifting to bars, consumption grew 3% this quarter, led by growth from our Hero Crispy line and our new overload bars. Initial distribution and velocities for overload continue to build in line with our plan, and both consumer and retailer feedback has been positive. The recent launch of our 45 gram Quest milkshake is also progressing nicely, building ACV and awareness. We're supporting this new platform with activations across the country focused on driving trial. Similar to overload, ATV is expected to build through the rest of the calendar year. We're also seeing solid contributions from our Bakeshop platform, which continues to be a highly incremental basket builder for us and retailers. We're excited about the innovation we have coming on this platform in fiscal 2026. To wrap it up on Quest, we're pleased with our Q3 performance and execution. As we enter Q4, we remain committed to driving growth and investing in the brand, positioning Quest continue its growth trajectory into fiscal 26. Moving to Atkins, consumption in the third quarter was down 13% versus prior year, consistent with our forecast. As we discussed last quarter, declines accelerated due to broader distribution losses at a key customer and from not repeating high volume merchandising events from a year ago. These two drivers accounted for most of the Q3 decline. We're on a journey towards a more focused and sustainable Atkins business. Importantly, the core skews of the Atkins portfolio perform above category velocity benchmarks. However, the brand does have a long tail of skews, many of which turn at below category average levels. Therefore, our approach continues to be to drive towards an optimized assortment for the brand, including bringing to market improved innovation like we've done with the 30-gram Act and Strong Shed. In channels like e-commerce, where we do not have space constraints, we continue to grow nicely with retail takeaway at a key customer up 7% this quarter. Part of the rationale in proactively pruning Act and shelf space is working with retailers where possible to more effectively utilize the total shelf space allocated to Simlica Foods. As an example, during upcoming resets, we expect Atkins to see a significant decline in distribution at a large mass retailer. However, we will offset a majority of Atkins space losses with gains for Quest and Owens SKUs that are higher turning and, in the case of Quest, more profitable. Our commitment to supporting the brand and confidence in the long-term vitality of the business is underpinned by the strength of the core SKUs. Consumer research and customer conversations continue to reinforce a strong need for a science-based brand and products that help consumers with their weight loss journey, including those using or coming off GLP-1 drugs. We remain committed to our revitalization plan, again, in support of building a healthier, more profitable, and more sustainable business. Moving to Owen. Retail takeaway increased 24% in Q3. with strong contribution across channels. Owen's ready-to-drink shakes retail takeaway grew over 20% in the quarter. Distribution increased 18%, benefiting from recent gains made during the spring recess. Reflecting on Q3 consumption growth, we fully anticipated that trends would slow relative to the first half as we were lapping some sizable wins from the prior year. As we enter Q4, despite a slightly slower start in June, we expect retail takeaway trends to remain strong, benefiting from incremental distribution wins as well as planned merchandising activities across several retail partners. Stepping back, we continue to see a long runway of growth for the brand due to strong velocities and category incrementality that position Owen to continue to expand distribution, household penetration and awareness, which remain well below peers, and leveraging Simply's R&D team to fill key portfolio gaps across flavors and sizes in even new formats. At approximately 10% of our net sales today, and with integration work nearly complete, we remain confident in our ability to drive strong double-digit growth. We have the team, capabilities, and insurgent mindset to enable Owens to contribute to Simply's top and bottom line growth for years to come. To summarize, I'm pleased with the momentum in our business, our fiscal year-to-date performance, and our outlook as we work to close the year. Simply Good is uniquely positioned as a leader in the fast-growing nutritional snacking category with a portfolio and team built to lead the generational shift of demand towards high-protein, low-sugar, and low-carb food and beverage products. We will do this by introducing delicious innovations, expanding physical availability of our products, and building brand awareness. With approximately 70% of our portfolios through Quest and Owens driving strong top and bottom line growth, as well as an agile culture, flexible supply chain, and a talented team, we are confident in our ability to deliver sustainable growth and create meaningful shareholder value. I will now turn the call over to Chris who will provide you with the details of our financial results and outlook.