The Simply Good Foods Company Reports Fiscal First Quarter 2024 Financial Results and Reaffirms Full Fiscal Year 2024 Net Sales and Adjusted EBITDA Outlook
First Quarter Summary:(1)
- Net sales of
$308.7 million versus$300.9 million - Net income of
$35.6 million versus$35.9 million - Earnings per diluted share (“EPS”) of
$0.35 versus$0.36 - Adjusted Diluted EPS(2) of
$0.43 versus$0.42 - Adjusted EBITDA(4)
$62.0 million versus$60.8 million
Reaffirm fiscal year 2024 Net Sales and Adjusted EBITDA(3) outlook(4):
- Net sales expected to increase at the high end of the Company’s long-term algorithm of 4-6%, including the benefit of a fifty- third week
- Adjusted EBITDA(3) anticipated to increase slightly greater than the net sales growth rate
"We are pleased with our fiscal first quarter financial results and marketplace performance that were in line with estimates," said
"Our first quarter marketplace results are a positive start to the year and, while early, the second quarter is off to a good start. Additionally, we have strong marketing and merchandising plans in place for "New Year,
Fiscal First Quarter 2024 Results
Net sales increased
Gross profit was
In the first quarter of fiscal 2024, the Company reported net income of
Operating expenses of
Net interest income and interest expense was
Adjusted EBITDA(3), a non-GAAP financial measure used by the Company that makes certain adjustments to net income calculated under GAAP, was
In the first quarter of fiscal 2024, the Company reported earnings per diluted share (“Diluted EPS”) of
Adjusted Diluted EPS(3), a non-GAAP financial measure used by the Company that makes certain adjustments to Diluted EPS calculated under GAAP, was
Balance Sheet and Cash Flow
At the end of the first quarter of fiscal 2024, the Company had cash of
Outlook(4)
Given the good start to the year, the Company reaffirms its full year fiscal 2024 outlook. The Company expects sales growth to be driven by volume and has strong advertising and marketing plans in place, as well as innovation, merchandising and promotions that should drive sustained, overall, financial and marketplace results.
Additionally, the Company expects lower supply chain costs in fiscal 2024, which will result in strong gross margin expansion and provide it with flexibility to meaningfully invest in marketing and growth initiatives, as well as new organizational capabilities. Therefore, the Company continues to anticipate the following for the full year fiscal 2024:
- Net sales expected to increase at the high end of the Company's long-term algorithm of 4-6%, including the benefit of a fifty-third week; and
- Adjusted EBITDA(4,6) anticipated to increase slightly greater than the net sales growth rate.
___________________________________
(1) All comparisons for the first quarter ended
(2) Adjusted Diluted Earnings Per Share is a non-GAAP financial measure. The Company excludes acquisition related costs, such as business transaction costs, integration expense and depreciation and amortization expense in calculating Adjusted Diluted Earnings Per Share. Please refer to "Reconciliation of Adjusted Diluted Earnings Per Share" in this press release for an explanation and reconciliation of this non-GAAP financial measure.
(3) Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") is a non-GAAP financial measure. Please refer to "Reconciliation of Adjusted Diluted Earnings Per Share" in this press release for an explanation and reconciliation of this non-GAAP financial measure.
(4) The Company does not provide a forward-looking reconciliation of Adjusted Diluted Earnings Per Share to Earnings Per Share or Adjusted EBITDA to Net Income, the most directly comparable GAAP financial measures, expected for 2024, because we are unable to provide such a reconciliation without unreasonable effort due to the unavailability of reliable estimates for certain components of consolidated net income and the respective reconciliations, and the inherent difficulty of predicting what the changes in these components will be throughout the fiscal year. As these items may vary greatly between periods, we are unable to address the probable significance of the unavailable information, which could significantly affect our future financial results.
(5) Combined
Conference Call and Webcast Information
The Company will host a conference call with members of the executive management team to discuss these results today,
About
Investor Contact
Vice President, Investor Relations,
(720) 768-2681
mpogharian@simplygoodfoodsco.com
Forward Looking Statements
Certain statements made herein are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by or include words such as “will”, “expect”, “intends” or other similar words, phrases or expressions. These statements relate to future events or our future financial or operational performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. We caution you that these forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. You should not place undue reliance on forward-looking statements. These statements reflect our current views with respect to future events, are based on assumptions and are subject to risks and uncertainties. These forward looking statements include, among other things, statements regarding our operations being dependent on changes in consumer preferences and purchasing habits regarding our products, a global supply chain and effects of supply chain constraints and inflationary pressure on us and our contract manufacturers, our ability to continue to operate at a profit or to maintain our margins, the effect pandemics or other global disruptions on our business, financial condition and results of operations, the sufficiency of our sources of liquidity and capital, our ability to maintain current operation levels and implement our growth strategies, our ability to maintain and gain market acceptance for our products or new products, our ability to capitalize on attractive opportunities, our ability to respond to competition and changes in the economy including changes regarding inflation and increasing ingredient and packaging costs and labor challenges at our contract manufacturers and third party logistics providers, the amounts of or changes with respect to certain anticipated raw materials and other costs, difficulties and delays in achieving the synergies and cost savings in connection with acquisitions, changes in the business environment in which we operate including general financial, economic, capital market, regulatory and geopolitical conditions affecting us and the industry in which we operate, our ability to maintain adequate product inventory levels to timely supply customer orders, changes in taxes, tariffs, duties, governmental laws and regulations, the availability of or competition for other brands, assets or other opportunities for investment by us or to expand our business, competitive product and pricing activity, difficulties of managing growth profitably, the loss of one or more members of our management team, potential for increased costs and harm to our business resulting from unauthorized access of the information technology systems we use in our business, expansion of our wellness platform and other risks and uncertainties indicated in the Company’s Form 10-K, Form 10-Q, and Form 8-K reports (including all amendments to those reports) filed with the
Consolidated Balance Sheets
(Unaudited, dollars in thousands, except share and per share data)
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 121,391 | $ | 87,715 | ||||
| Accounts receivable, net | 135,561 | 145,078 | ||||||
| Inventories | 123,175 | 116,591 | ||||||
| Prepaid expenses | 6,076 | 6,294 | ||||||
| Other current assets | 10,336 | 15,974 | ||||||
| Total current assets | 396,539 | 371,652 | ||||||
| Long-term assets: | ||||||||
| Property and equipment, net | 23,830 | 24,861 | ||||||
| Intangible assets, net | 1,104,318 | 1,108,119 | ||||||
| 543,134 | 543,134 | |||||||
| Other long-term assets | 47,238 | 49,318 | ||||||
| Total assets | $ | 2,115,059 | $ | 2,097,084 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 43,249 | $ | 52,712 | ||||
| Accrued interest | 1,574 | 1,940 | ||||||
| Accrued expenses and other current liabilities | 34,083 | 35,062 | ||||||
| Current maturities of long-term debt | 83 | 143 | ||||||
| Total current liabilities | 78,989 | 89,857 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt, less current maturities | 272,032 | 281,649 | ||||||
| Deferred income taxes | 120,200 | 116,133 | ||||||
| Other long-term liabilities | 36,660 | 38,346 | ||||||
| Total liabilities | 507,881 | 525,985 | ||||||
| See commitments and contingencies (Note 9) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, |
— | — | ||||||
| Common stock, |
1,022 | 1,019 | ||||||
| (78,451 | ) | (78,451 | ) | |||||
| Additional paid-in-capital | 1,303,411 | 1,303,168 | ||||||
| Retained earnings | 383,517 | 347,956 | ||||||
| Accumulated other comprehensive loss | (2,321 | ) | (2,593 | ) | ||||
| Total stockholders’ equity | 1,607,178 | 1,571,099 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,115,059 | $ | 2,097,084 | ||||
Consolidated Statements of Income and Comprehensive Income
(Unaudited, dollars in thousands, except share and per share data)
| Thirteen Weeks Ended | ||||||||
| Net sales | $ | 308,678 | $ | 300,878 | ||||
| Cost of goods sold | 193,560 | 189,886 | ||||||
| Gross profit | 115,118 | 110,992 | ||||||
| Operating expenses: | ||||||||
| Selling and marketing | 31,990 | 28,534 | ||||||
| General and administrative | 26,950 | 25,641 | ||||||
| Depreciation and amortization | 4,358 | 4,327 | ||||||
| Total operating expenses | 63,298 | 58,502 | ||||||
| Income from operations | 51,820 | 52,490 | ||||||
| Other income (expense): | ||||||||
| Interest income | 1,090 | 7 | ||||||
| Interest expense | (6,034 | ) | (7,055 | ) | ||||
| Gain on foreign currency transactions | 226 | 108 | ||||||
| Other income | 6 | 6 | ||||||
| Total other expense | (4,712 | ) | (6,934 | ) | ||||
| Income before income taxes | 47,108 | 45,556 | ||||||
| Income tax expense | 11,547 | 9,696 | ||||||
| Net income | $ | 35,561 | $ | 35,860 | ||||
| Other comprehensive income: | ||||||||
| Foreign currency translation, net of reclassification adjustments | 272 | (222 | ) | |||||
| Comprehensive income | $ | 35,833 | $ | 35,638 | ||||
| Earnings per share from net income: | ||||||||
| Basic | $ | 0.36 | $ | 0.36 | ||||
| Diluted | $ | 0.35 | $ | 0.36 | ||||
| Weighted average shares outstanding: | ||||||||
| Basic | 99,629,188 | 99,200,557 | ||||||
| Diluted | 101,094,736 | 100,723,036 | ||||||
Consolidated Statements of Cash Flows
(Unaudited, dollars in thousands)
| Thirteen Weeks Ended | ||||||||
| Operating activities | ||||||||
| Net income | $ | 35,561 | $ | 35,860 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 5,605 | 4,952 | ||||||
| Amortization of deferred financing costs and debt discount | 385 | 532 | ||||||
| Stock compensation expense | 4,168 | 3,313 | ||||||
| Estimated credit losses | 51 | (141 | ) | |||||
| Unrealized gain on foreign currency transactions | (226 | ) | (108 | ) | ||||
| Deferred income taxes | 4,084 | 3,206 | ||||||
| Amortization of operating lease right-of-use asset | 1,735 | 1,660 | ||||||
| Other | 301 | 571 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | 9,869 | (26,288 | ) | |||||
| Inventories | (6,699 | ) | 638 | |||||
| Prepaid expenses | 257 | (541 | ) | |||||
| Other current assets | 5,173 | 8,631 | ||||||
| Accounts payable | (9,806 | ) | (6,609 | ) | ||||
| Accrued interest | (366 | ) | 97 | |||||
| Accrued expenses and other current liabilities | (1,337 | ) | (14,843 | ) | ||||
| Other assets and liabilities | (1,232 | ) | (2,212 | ) | ||||
| Net cash provided by operating activities | 47,523 | 8,718 | ||||||
| Investing activities | ||||||||
| Purchases of property and equipment | (744 | ) | (1,151 | ) | ||||
| Investments in intangible and other assets | (56 | ) | (87 | ) | ||||
| Net cash used in investing activities | (800 | ) | (1,238 | ) | ||||
| Financing activities | ||||||||
| Proceeds from option exercises | — | 4,563 | ||||||
| Tax payments related to issuance of restricted stock units and performance stock units | (3,642 | ) | (2,298 | ) | ||||
| Payments on finance lease obligations | (61 | ) | (78 | ) | ||||
| Cash received on repayment of note receivable | 600 | — | ||||||
| Repurchase of common stock | — | (16,448 | ) | |||||
| Principal payments of long-term debt | (10,000 | ) | (6,500 | ) | ||||
| Net cash used in financing activities | (13,103 | ) | (20,761 | ) | ||||
| Cash and cash equivalents | ||||||||
| Net increase (decrease) in cash | 33,620 | (13,281 | ) | |||||
| Effect of exchange rate on cash | 56 | (69 | ) | |||||
| Cash at beginning of period | 87,715 | 67,494 | ||||||
| Cash and cash equivalents at end of period | $ | 121,391 | $ | 54,144 | ||||
Reconciliation of EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA are non-GAAP financial measures commonly used in our industry and should not be construed as alternatives to net income as an indicator of operating performance or as alternatives to cash flow provided by operating activities as a measure of liquidity (each as determined in accordance with GAAP).
The following unaudited table provides a reconciliation of EBITDA and Adjusted EBITDA to its most directly comparable GAAP measure, which is net income, for the thirteen weeks ended
| (In thousands) |
Thirteen Weeks Ended | |||||||
| Net income | $ | 35,561 | $ | 35,860 | ||||
| Interest income | (1,090 | ) | (7 | ) | ||||
| Interest expense | 6,034 | 7,055 | ||||||
| Income tax expense | 11,547 | 9,696 | ||||||
| Depreciation and amortization | 5,605 | 4,952 | ||||||
| EBITDA | 57,657 | 57,556 | ||||||
| Stock-based compensation expense | 4,168 | 3,313 | ||||||
| Executive transition costs | 366 | — | ||||||
| Other (1) | (226 | ) | (103 | ) | ||||
| Adjusted EBITDA | $ | 61,965 | $ | 60,766 | ||||
| (1) Other items consist principally of exchange impact of foreign currency transactions and other expenses. | ||||||||
Reconciliation of Adjusted Diluted Earnings Per Share
Adjusted Diluted Earnings per Share. Adjusted Diluted Earnings per Share is a non-GAAP financial measure commonly used in our industry and should not be construed as an alternative to diluted earnings per share as an indicator of operating performance.
The following unaudited tables below provide a reconciliation of Adjusted Diluted Earnings Per Share to its most directly comparable GAAP measure, which is diluted earnings per share, for the thirteen weeks ended
| Thirteen Weeks Ended | ||||||||
| Diluted earnings per share | $ | 0.35 | $ | 0.36 | ||||
| Depreciation and amortization | 0.06 | 0.05 | ||||||
| Stock-based compensation expense | 0.04 | 0.03 | ||||||
| Executive transition costs | 0.00 | — | ||||||
| Tax effects of adjustments (1) | (0.02 | ) | (0.02 | ) | ||||
| Adjusted diluted earnings per share | $ | 0.43 | $ | 0.42 | ||||
| (1) This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. The tax effect of each adjustment is computed (i) by dividing the gross amount of the adjustment, as shown in the Adjusted EBITDA reconciliation, by the number of diluted weighted average shares outstanding for the applicable fiscal period and (ii) applying an overall assumed statutory tax rate of 25% for the thirteen weeks ended |
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Reconciliation of Net Debt to Adjusted EBITDA
Net Debt to Adjusted EBITDA. Net Debt to Adjusted EBITDA is a non-GAAP financial measure which
The following unaudited table below provides a reconciliation of Net Debt to Adjusted EBITDA as of
| (In thousands) | ||||
| Net Debt: | ||||
| Total debt outstanding under the Credit Agreement | $ | 275,000 | ||
| Less: cash and cash equivalents | (121,391 | ) | ||
| Net Debt as of |
$ | 153,609 | ||
| Trailing twelve months Adjusted EBITDA: | ||||
| Add: Adjusted EBITDA for the thirty-nine weeks ended |
$ | 61,965 | ||
| Add: Adjusted EBITDA for the fiscal year ended |
245,555 | |||
| Less: Adjusted EBITDA for the thirty-nine weeks ended |
(60,766 | ) | ||
| Trailing twelve months Adjusted EBITDA as of |
$ | 246,754 | ||
| Net Debt to Adjusted EBITDA | 0.6x | |||
Source: Simply Good Foods USA, Inc.