The Simply Good Foods Company

Greetings and welcome to the Simply Good Foods Company third quarter fiscal 2026 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Matt Seiler, Vice President Investor Relations and Treasury. Please go ahead.

Thank you, operator. Good morning and welcome to the Simply Good Foods Company's third quarter fiscal year 2026 earnings call for the period ended May 30th, 2026. I'm joined this morning by President and CEO Joe Scalzo and Chris Bealer, Chief Financial Officer. A copy of our earnings release and accompanying presentation is available on the Investors section of the company's website at thesimplygoodfoodscompany.com. This call is being webcast. and an archive of today's remarks will be made available. During 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 in the company's SEC filings. 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 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 for their most comparable measures prepared in accordance with GAAP. Finally, all retail takeaway data included in our discussion today, unless otherwise noted, I will now turn the call over to Joe Scalzo. Thanks, Matt. Good morning, everyone. Thank you for joining us today. This morning, I'll recap our third quarter results and then provide you with some perspective on the performance of our brands.

as well as an update on our progress toward our turnaround objectives. Then I'll turn the call over to Chris who will discuss our financial results and our updated outlook in a bit more detail before we open it up to take your questions. In the third quarter, our results came in ahead of our expectations. While we're not satisfied with our overall performance, the quarter reinforced our belief that the actions we are taking are the right one. We are ensuring organizational focus, improving execution, and strengthening the economic foundation of the business. As we discussed on our last earnings call, our overall performance remains well below where we believe this business should perform with each key financial metric declining meaningfully versus the prior year. Importantly, We remain in the early stages of our turnaround and have significant work ahead. Net sales declined 6.3% to $357 million. Gross margin declined 390 basis points to 32.5%. And adjusted EBITDA declined 22.5% to $57.2 million. Quest and Owen net sales grew 1.1% and 3.6% versus prior year respectively. And both brands performed slightly better than we expected. We continue to see encouraging momentum in some parts of the portfolio, particularly Quest chips and milkshakes. Atkins net sales declined 24.6% in the quarter reflecting continued pressure from declining household penetration as a result of insufficient marketing support behind the brand. Our retail takeaway declined 6.7% during the quarter, essentially unchanged from the second quarter. The purposeful nutrition category grew 10% during the same timeframe. As I have spent more time inside the business, It's becoming increasingly clear to me that our challenges are largely execution driven rather than category driven. Purposeful nutrition remains an attractive category supported by favorable long-term consumer trends and retailers continue to view the category as an important source of growth. Importantly, these execution challenges are within our control to fix and the actions we are taking are designed to address each of them directly. Against that backdrop, we remain focused on three priorities that will determine the success of our turnaround. One, strengthening the economics of our business. Two, ensuring consistency and discipline in strategic choices driving organizational clarity, focus and efficiency. And three, Rebuilding brand investment behind superior consumer insights and marketing execution. We are making progress on each, although we are still in the early stages of the work. First, we are strengthening the economics of the business by improving our cost structure and rebuilding margins. We remain disciplined in managing our cost base and are executing against the structural actions we previously outlined. On pricing, we are taking the actions needed to offset inflation and other cost pressures. In addition, our productivity initiatives are gaining traction and are expected to provide benefits as we move forward. Given the significant cost inflation we are experiencing this fiscal year and believe will continue into the next year, We recently announced a high single digit price increase across most of our portfolio that will become effective in September. This increase is necessary to offset inflation we are experiencing across proteins, packaging, and other key cost inputs. While we remain focused on productivity initiatives and cost reduction efforts, rebuilding margins requires decisive action on pricing. and we believe this increase is appropriate. Second, while still early, we are beginning to see signs that the organization is operating with greater focus and accountability. Decisions are being made faster, priorities are clearer and resources are increasingly concentrated behind fewer, higher return opportunities. We believe our better than expected financial performance in the quarter is early evidence of our progress. Third, we are revamping our brand building capabilities through stronger consumer insights, more effective marketing, and using ROI as our key metric in making future investment decisions. As an example of the progress in this area, we were already shifting investments towards top of the funnel streaming and connected brand media investments to drive higher returns and strengthen our brand metrics. Additionally, we just completed a thorough assessment of GLP-1 therapies and their impact on consumption behaviors that provided us invaluable consumer insights to guide our marketing and innovation efforts moving forward. With that, let me turn to an update on each of our brands. Turning first to Quest. Quest remains our largest brand and most important growth engine of the company. In the third quarter, Quest retail takeaway grew 1.4% compared to 2.4% growth last quarter. Importantly, household penetration increased 120 basis points year over year to 20.5%. The most important takeaway is that Quest continues to recruit consumers, demonstrating that the brand remains highly relevant. Our challenge today is to refocus on our core bar and chip segments that represent 80% of the brand, while improving buy rate, particularly within bars. Within Quest, chips continue to perform well as consumers increasingly seek better-for-use salty snack alternatives. Quest Chips consumption grew by over 17% in the quarter and household penetration for Quest Chips is now approximately 11%. This remains a strong example of where the brand is aligned with consumer demand and where focused investment can continue to drive growth. We see encouraging signs across pockets of our recent innovation. We're seeing a strong growth in our milkshake segment. which was up almost 50% in the period, albeit from a small base. This is another example of our ability to grow the brand when closely aligned with evolving consumer demand. At the same time, we're not satisfied with the recent performance of our bar business. Despite an incremental club rotation that began during the quarter, bar consumption declined by roughly 5%, which impacted total brand buy rate. Reaccelerating growth in Quest bars is our highest priority. Our work is focused on improving top of the funnel communication, ensuring our innovation pipeline reflects evolving consumer preferences, and supporting the bar segment with an appropriate level of marketing investment. During the quarter, we hired a new marketing agency on Quest with a single-minded objective of improving brand message to our key target consumer group by reasserting our superior nutritionals and taste across the entire brand portfolio and most importantly in our key bar segment. Moving to Atkins, Atkins retail takeaway declined 23.9% in the quarter compared to a decline of 23.4% last quarter. Declining household penetration leading to distribution losses continue to be the main drivers of the decline. Total brand household penetration currently stands at 8.5%, down 220 basis points from last year. Consistent with what we said last quarter, there are also broad brand factors we are addressing. Atkins has not received the proper level of marketing support, messaging was less consistent and moved away from the brand's core weight management proposition, and the ability to recruit new consumers weakened. which led to slower velocities. Our focus now is on resetting the retail baseline and managing Atkins in a more disciplined fact-based manner. Many of our retail partners continue to view Atkins as a relevant brand with a meaningful base of loyal heavy buyers. Importantly, we do not believe Atkins needs to be a different brand. Rather, it needs to become a better executed version of the brand consumers have trusted for decades. We believe that Atkins can play a meaningful role in a GLP-1 world with consumers seeking weight management benefits. Of note, Atkins consumption was more consistent during the quarter on a weekly run rate basis. As we move into the fourth quarter and into next year, Atkins comparisons become more favorable as we lap household and distribution losses during the prior year. This is very consistent with our second turnaround priority, remaining consistent in our strategic choices. For Atkins, that means restoring clarity around the consumer proposition, being disciplined about where we invest, and rebuilding the brand from a stronger More Focused Foundation. Turning to Owen. Owen retail takeaway declined 1.3% in the third quarter compared to a decline of 2.4% last quarter. Total brand household penetration currently stands at 4.3%, flat year over year. As we reported last quarter, the combination of a product quality issue and ineffective marketing execution negatively impacted performance on a number of Owen products. We have addressed the product issue, but do expect distribution losses over the next 6 to 12 months because of poor marketplace performance. With that said, we continue to believe Owen has meaningful long-term potential. Importantly, our confidence in Owen is based on the underlying consumer proposition, not on recent executions. We believe the challenges we are addressing stem primarily from integration and execution issues rather than a lack of consumer demand for clean label plant-based nutrition. Our consumer research continues to indicate there is a significant and growing audience seeking functional nutrition benefits such as plant-based protein and clean label ingredients. Looking ahead, our priority is to complete the distribution reset and refocus Owen Growth on core ready to drink and powder business. Before I turn the call over to Chris, I'd like to leave you with why I remain confident in the future of Simply Good Foods despite our current performance challenges. Simply put, I believe our category remains attractive and our brands remain relevant and our challenges are fixable. First, we operate in an attractive category supported by long-term consumer trends around health, wellness, and convenient nutrition. These trends remain highly relevant, and retailers continue to view purposeful nutrition as an important source of growth. In the food and beverage sectors, where any type of growth is at a premium, this category continues to outperform. We have a portfolio of strong brands that connect with distinct consumer segments and we are confident we can grow these brands longer term. Quest continues to expand its household penetration and remains one of the leading brands in the category. Atkins retains a loyal consumer base and meaningful brand equity, ideally suited to address the needs of GLP-1 weight management consumers. while Owen gives us access to the growing plant-based and clean label protein segment. Third, we have built strong capabilities in marketing, sales, R&D, and managing an outsourced supply chain. While we have not consistently translated those capabilities into performance recently, we believe they remain important competitive advantage that can support future growth and value creation. Fourth, our asset-light operating model remains a competitive advantage. It provides flexibility, supports strong cash generation, and allows us to direct resources towards the areas where we see the greatest opportunities to create value. And finally, we continue to maintain a strong balance sheet and substantial financial flexibility, which provides the ability to invest behind our brands, pursue the right strategic opportunities and continue allocating capital to the best long-term return. Taken together, these strengths reinforce our confidence that we can restore profitable growth and deliver against our long-term financial algorithm. To be clear, we're not satisfied with our current performance and there is considerable work ahead. However, I am increasingly confident that we've correctly identified the issues, established the right priorities, and are taking the actions necessary to improve execution, restore profitability, and return the company to sustainable growth. While the turnaround remains in its early stages, I believe we are building a stronger and more valuable company for the long term. I'll turn the call over to Chris, who will provide more detail on this quarter's results and our updated outlook for the year. Chris?