The Simply Good Foods Company Reports Fiscal Fourth Quarter and Full Fiscal Year 2024 Financial Results and Provides Full Fiscal Year 2025 Outlook
Fourth Quarter Summary:(1)
Net sales of
$375.7 million versus$320.4 million Net income of
$29.3 million versus$36.6 million Earnings per diluted share (“EPS”) of
$0.29 versus$0.36 Adjusted Diluted EPS(2) of
$0.50 versus$0.45 Adjusted EBITDA(3)
$77.5 million versus$67.3 million
Full Fiscal Year 2025(3,4) Outlook:
Net sales expected to increase 8.5% to 10.5%
OWYN full fiscal year 2025 Net Sales expected to be in the
$135-145 million range
Adjusted EBITDA(3) expected to increase 4% to 6%
The fifty-third week in the fiscal 2024 comparison year is about a 2-percentage point headwind to both
Net Sales and Adjusted EBITDA growth in full year fiscal 2025 and is incorporated in the outlook aboveAssuming a comparable full year of OWYN results are included in fiscal 2024, as well as the exclusion of the fifty-third week in fiscal 2024, fiscal 2025 is expected to be in line with the Company's long-term algorithm; net sales growth in the 4-6% range and Adjusted EBITDA growth slightly greater than the net sales increase
"In fiscal 2024,
"In fiscal 2025, we will build on our existing capabilities to strengthen the position of our brands in the marketplace. We are increasing Quest chips capacity and anticipate that chips retail inventory levels will be back at normal levels by the end of the first quarter. This should position us for solid chips growth in the upcoming new year, new you season. While early, Quest bake shop products are doing well and in February we will launch the new Quest "Overload" bar, supported with strong advertising and marketing, that should improve our marketplace trends in this segment. Atkins revitalization plans are progressing as planned and the launch of core bar and shake innovation is tracking well. OWYN results continue to be strong, and the integration is proceeding as planned. We will continue to invest in our business and are committed to our vision of being a leader in the nutritional snacking category with brands that are well positioned to win over the near and long-term," Tanner concluded.
Fourth Quarter 2024 Results(1)
Net sales increased
Gross profit was
In the fourth quarter of fiscal 2024, the Company reported net income of
Operating expenses of
In the fourth quarter of fiscal 2024, the Company incurred costs related to the OWYN acquisition 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 fourth quarter of fiscal 2024, the Company reported earnings per diluted share (“Diluted EPS”) of
Adjusted Diluted EPS(2), a non-GAAP financial measure used by the Company that makes certain adjustments to Diluted EPS calculated under GAAP, was
Fifty-Three Weeks Ended
Net sales were
$1,331.3 million versus$1,242.7 million Net income of
$139.3 million versus$133.6 million Earnings per diluted share (“EPS”) of
$1.38 versus$1.32 Adjusted Diluted EPS(2) of
$1.83 versus$1.63 Adjusted EBITDA(3) of
$269.1 million versus$245.6 million
Net sales increased
Gross profit was
Net income was
Operating expenses of
For the fifty-three weeks ended
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
For the full fiscal year 2024, the Company reported Diluted EPS of
Adjusted Diluted EPS(2), 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
Full fiscal year 2024 cash provided by operating activities was
On
For the fourteen and fifty-three weeks ended
As of
Outlook(4)
While early, retail takeaway is off to a good start and the Company expects to deliver on its fiscal year 2025 plans. The Company continues to execute against its strategic initiatives and is making investments in the business that management expects will strengthen its brands in the marketplace. OWYN integration work is well underway and progressing as planned.
The Company expects strong Quest and OWYN net sales and retail takeaway growth in fiscal year 2025 driven by greater velocity, increased distribution, innovation and marketing investments. The Company is pleased with the progress of the Atkins revitalization plan and remains focused on the ongoing plan in fiscal 2025, particularly packaging and reformulation. In addition, as discussed last quarter, the Company will also focus on optimizing and improving the ROI of Atkins' brand investments in fiscal 2025. The Company anticipates this will affect Atkins fiscal 2025 net sales and retail takeaway but believes this is necessary to ensure the brand remains a sustainable and profitable business over the long-term.
As discussed last quarter, in fiscal 2025, the Company expects input cost inflation. Solid productivity and cost savings initiatives are in place that are expected to partially offset these higher costs, however, given the unprecedented increase in the cost of select inputs the Company anticipates gross margin compression in fiscal 2025.
Therefore, the Company anticipates the following in fiscal 2025:
Net Sales expected to increase 8.5% to 10.5%OWYN full fiscal year 2025 Net Sales expected to be in the
$135-145 million range
Adjusted EBITDA(3) expected to increase 4% to 6%
The fifty-third week in fiscal 2024 comparison year is about a 2-percentage point headwind to both
Net Sales and Adjusted EBITDA growth in full year fiscal 2025 and incorporated in the outlook aboveAssuming a comparable full year of OWYN results are included in fiscal 2024, as well as the exclusion of the fifty-third week in fiscal 2024, fiscal 2025 is expected to be in line with the Company's long-term algorithm; net sales growth in the 4-6% range and Adjusted EBITDA growth slightly greater than the net sales increase
___________________________________
(1) All comparisons for the fourth 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 EBITDA and Adjusted EBITDA” 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 2025, 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) Legacy
(6) Combined Quest, Atkins, and
(7) Net Debt to Adjusted EBITDA is a non-GAAP financial measure which
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 risks and uncertainties relate to, among other things, our ability to achieve our estimates of OWYN’s net sales and Adjusted EBITDA and our anticipated synergies from the OWYN Acquisition, our net leverage ratio post-acquisition, our Adjusted EPS post-acquisition, our ability to maintain OWYN personnel and effectively integrate OWYN, 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
and Subsidiaries | ||||||||
|
| |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 132,530 | $ | 87,715 | ||||
| Accounts receivable, net | 150,721 | 145,078 | ||||||
| Inventories | 142,107 | 116,591 | ||||||
| Prepaid expenses | 5,730 | 6,294 | ||||||
| Other current assets | 9,192 | 15,974 | ||||||
| Total current assets | 440,280 | 371,652 | ||||||
| Long-term assets: | ||||||||
| Property and equipment, net | 24,830 | 24,861 | ||||||
| Intangible assets, net | 1,336,466 | 1,108,119 | ||||||
| 591,687 | 543,134 | ||||||
| Other long-term assets | 42,881 | 49,318 | ||||||
| Total assets | $ | 2,436,144 | $ | 2,097,084 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 58,559 | $ | 52,712 | ||||
| Accrued interest | 265 | 1,940 | ||||||
| Accrued expenses and other current liabilities | 49,791 | 35,062 | ||||||
| Current maturities of long-term debt | — | 143 | ||||||
| Total current liabilities | 108,615 | 89,857 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt, less current maturities | 397,485 | 281,649 | ||||||
| Deferred income taxes | 166,012 | 116,133 | ||||||
| Other long-term liabilities | 36,546 | 38,346 | ||||||
| Total liabilities | 708,658 | 525,985 | ||||||
| See commitments and contingencies (Note 11) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, | — | — | ||||||
| Common stock, | 1,025 | 1,019 | ||||||
stock, 2,365,100 shares and 2,365,100 shares at cost at | (78,451 | ) | (78,451 | ) | ||||
| Additional paid-in-capital | 1,319,686 | 1,303,168 | ||||||
| Retained earnings | 487,265 | 347,956 | ||||||
| Accumulated other comprehensive loss | (2,039 | ) | (2,593 | ) | ||||
| Total stockholders’ equity | 1,727,486 | 1,571,099 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,436,144 | $ | 2,097,084 | ||||
and Subsidiaries | ||||||||||||||||
| 14-Weeks Ended | 13-Weeks Ended | 53-Weeks Ended | 52-Weeks Ended | |||||||||||||
|
|
|
| |||||||||||||
| Net sales | $ | 375,687 | $ | 320,418 | $ | 1,331,321 | $ | 1,242,672 | ||||||||
| Cost of goods sold | 229,735 | 199,968 | 819,755 | 789,252 | ||||||||||||
| Gross profit | 145,952 | 120,450 | 511,566 | 453,420 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling and marketing | 40,832 | 30,839 | 143,929 | 119,489 | ||||||||||||
| General and administrative | 41,273 | 29,481 | 129,699 | 111,566 | ||||||||||||
| Depreciation and amortization | 4,206 | 4,381 | 16,917 | 17,416 | ||||||||||||
| Business transaction costs | 11,821 | — | 14,524 | — | ||||||||||||
| Total operating expenses | 98,132 | 64,701 | 305,069 | 248,471 | ||||||||||||
| Income from operations | 47,820 | 55,749 | 206,497 | 204,949 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 1,412 | 484 | 4,307 | 1,144 | ||||||||||||
| Interest expense | (9,371 | ) | (6,867 | ) | (26,029 | ) | (30,068 | ) | ||||||||
| Gain (loss) on foreign currency transactions | 76 | (418 | ) | 267 | (344 | ) | ||||||||||
| Other income (expense) | 900 | 1 | 1,008 | 11 | ||||||||||||
| Total other income (expense) | (6,983 | ) | (6,800 | ) | (20,447 | ) | (29,257 | ) | ||||||||
| Income before income taxes | 40,837 | 48,949 | 186,050 | 175,692 | ||||||||||||
| Income tax expense | 11,546 | 12,307 | 46,741 | 42,117 | ||||||||||||
| Net income | $ | 29,291 | $ | 36,642 | $ | 139,309 | $ | 133,575 | ||||||||
| Other comprehensive income: | ||||||||||||||||
| Foreign currency translation, net of reclassification adjustments | 202 | (211 | ) | 554 | (642 | ) | ||||||||||
| Comprehensive income | $ | 29,493 | $ | 36,431 | $ | 139,863 | $ | 132,933 | ||||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 0.29 | $ | 0.37 | $ | 1.39 | $ | 1.34 | ||||||||
| Diluted | $ | 0.29 | $ | 0.36 | $ | 1.38 | $ | 1.32 | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 100,144,460 | 99,556,078 | 99,929,196 | 99,442,046 | ||||||||||||
| Diluted | 101,355,223 | 100,943,710 | 101,281,888 | 100,880,079 | ||||||||||||
and Subsidiaries | ||||||||
| 53-Weeks Ended | 52-Weeks Ended | |||||||
|
| |||||||
| Operating activities | ||||||||
| Net income | $ | 139,309 | $ | 133,575 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 20,993 | 20,253 | ||||||
| Amortization of deferred financing costs and debt discount | 2,037 | 2,763 | ||||||
| Stock compensation expense | 18,421 | 14,480 | ||||||
| Estimated credit (recoveries) losses | (150 | ) | 315 | |||||
| Unrealized (gain) loss on foreign currency transactions | (267 | ) | 344 | |||||
| Deferred income taxes | 8,366 | 10,590 | ||||||
| Amortization of operating lease right-of-use asset | 6,991 | 6,729 | ||||||
| Other | 988 | 567 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | 9,129 | (13,374 | ) | |||||
| Inventories | 13,726 | 8,169 | ||||||
| Prepaid expenses | 1,164 | (1,306 | ) | |||||
| Other current assets | 4,957 | 6,837 | ||||||
| Accounts payable | (15,450 | ) | (9,510 | ) | ||||
| Accrued interest | (1,675 | ) | 1,780 | |||||
| Accrued expenses and other current liabilities | 12,730 | (5,223 | ) | |||||
| Other assets and liabilities | (5,565 | ) | (5,872 | ) | ||||
| Net cash provided by operating activities | 215,704 | 171,117 | ||||||
| Investing activities | ||||||||
| Purchases of property and equipment | (5,743 | ) | (11,585 | ) | ||||
| Acquisition of business, net of cash acquired | (280,409 | ) | — | |||||
| Investments in intangible assets and other assets | (730 | ) | (603 | ) | ||||
| Net cash used in investing activities | (286,882 | ) | (12,188 | ) | ||||
| Financing activities | ||||||||
| Proceeds from option exercises | 4,293 | 5,247 | ||||||
| Tax payments related to issuance of restricted stock units | (5,048 | ) | (2,859 | ) | ||||
| Repurchase of common stock | — | (16,448 | ) | |||||
| Payments on finance lease obligations | (145 | ) | (278 | ) | ||||
| Principal payments of long-term debt | (135,000 | ) | (121,500 | ) | ||||
| Proceeds from issuance of long-term debt | 250,000 | — | ||||||
| Cash received on repayment of note receivable | 3,000 | — | ||||||
| Deferred financing costs | (1,199 | ) | (2,694 | ) | ||||
| Net cash provided by (used in) financing activities | 115,901 | (138,532 | ) | |||||
| Net increase (decrease) in cash | 44,723 | 20,397 | ||||||
| Effect of exchange rate on cash | 92 | (176 | ) | |||||
| Cash at beginning of period | 87,715 | 67,494 | ||||||
| Cash at end of period | $ | 132,530 | $ | 87,715 | ||||
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 fourteen and fifty-three weeks ended
| (In thousands) | 14-Weeks Ended | 13-Weeks Ended | 53-Weeks Ended | 52-Weeks Ended | ||||||||||||
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|
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| Net income | $ | 29,291 | $ | 36,642 | $ | 139,309 | $ | 133,575 | ||||||||
| Interest income | (1,412 | ) | (484 | ) | (4,307 | ) | (1,144 | ) | ||||||||
| Interest expense | 9,371 | 6,867 | 26,029 | 30,068 | ||||||||||||
| Income tax expense | 11,546 | 12,307 | 46,741 | 42,117 | ||||||||||||
| Depreciation and amortization | 5,122 | 5,209 | 20,993 | 20,253 | ||||||||||||
| EBITDA | 53,918 | 60,541 | 228,765 | 224,869 | ||||||||||||
| Stock-based compensation expense | 5,212 | 4,024 | 18,421 | 14,480 | ||||||||||||
| Executive transition costs | 3,150 | 2,232 | 3,871 | 3,390 | ||||||||||||
| Business transaction costs | 11,821 | — | 14,524 | — | ||||||||||||
| Inventory step-up | 3,226 | — | 3,226 | — | ||||||||||||
| Integration of OWYN | 588 | — | 588 | — | ||||||||||||
| Term loan transaction fees | — | — | — | 2,423 | ||||||||||||
| Other (1) | (464 | ) | 457 | (265 | ) | 393 | ||||||||||
| Adjusted EBITDA | $ | 77,451 | $ | 67,254 | $ | 269,130 | $ | 245,555 | ||||||||
| (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 fourteen and fifty-three weeks ended
| 14-Weeks Ended | 13-Weeks Ended | 53-Weeks Ended | 52-Weeks Ended | |||||||||||||
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| Diluted earnings per share | $ | 0.29 | $ | 0.36 | $ | 1.38 | $ | 1.32 | ||||||||
| Depreciation and amortization | 0.05 | 0.05 | 0.21 | 0.20 | ||||||||||||
| Stock-based compensation expense | 0.05 | 0.04 | 0.18 | 0.14 | ||||||||||||
| Executive transition costs | 0.03 | 0.02 | 0.04 | 0.03 | ||||||||||||
| Business transaction costs | 0.12 | — | 0.14 | — | ||||||||||||
| Inventory step-up | 0.03 | — | 0.03 | — | ||||||||||||
| Integration of OWYN | 0.01 | — | 0.01 | — | ||||||||||||
| Term loan transaction fees | — | — | — | 0.02 | ||||||||||||
| Tax effects of adjustments (2) | (0.07 | ) | (0.03 | ) | (0.15 | ) | (0.09 | ) | ||||||||
| Rounding (5) | (0.01 | ) | 0.01 | (0.01 | ) | 0.01 | ||||||||||
| Adjusted diluted earnings per share | $ | 0.50 | $ | 0.45 | $ | 1.83 | $ | 1.63 | ||||||||
| (2) 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 fourteen and fifty-three weeks ended | ||||||||||||||||
| (5) Adjusted Diluted Earnings Per Share amounts are computed independently for each quarter. Therefore, the sum of the quarterly Adjusted Diluted Earnings Per Share amounts may not equal the year to date Adjusted Diluted Earnings Per Share amounts due to rounding. | ||||||||||||||||
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 | $ | 400,000 | ||
| Less: cash and cash equivalents | (132,530 | ) | ||
| Net Debt as of | $ | 267,470 | ||
| Adjusted EBITDA | $ | 269,130 | ||
| Net Debt to Adjusted EBITDA | 1.0 | x | ||
Source: Simply Good Foods USA, Inc.