Simply Good Foods Co (SMPL)·Q1 2025 Earnings Summary

Executive Summary

• Q1 FY25 net sales rose 10.6% to $341.3M on inclusion of OWYN; gross margin was 38.2% (up 90 bps YoY) and adjusted EBITDA grew 13.1% to $70.1M; diluted EPS $0.38 and adjusted diluted EPS $0.49 .
• Management reaffirmed FY25 guidance: net sales +8.5% to +10.5%, adjusted EBITDA +4% to +6%, OWYN net sales $135–$145M; FY24’s 53rd week is a ~2ppt headwind to both top- and bottom-line growth .
• Key brands: Quest POS +~10% with chips +26% in Q1 and ~+35% in Nov/Dec; OWYN POS +67%; Atkins POS -~4% with shakes +~5% (better than plan) .
• Caution flags into 2H: FY25 gross margin expected down ~200 bps YoY; Q2 GM down ~300 bps YoY (about one-third from OWYN mix) amid cocoa/whey inflation; shipments vs consumption should realign by end of Q2 after Q1 timing impact (~3ppt) .
• Portfolio catalysts: chips capacity restored (second line live), broader club test for Quest chips in 1H CY25, RTD mid-single-digit price increase in spring; Atkins investment rationalization continues (HSD POS decline for FY25) .

What Went Well and What Went Wrong

What Went Well

• Quest momentum: retail takeaway +~10% with chips +26% in Q1; chips growth accelerated ~+35% in Nov/Dec as capacity normalized (second line online) .
• OWYN outperformance: POS +67% (distribution and velocity); Q1 OWYN net sales $32.3M, slightly above plan; management confident in doubling sales in 3–4 years .
• Profitability ahead of plan: Q1 gross margin 38.2% exceeded forecast due to lower-than-anticipated legacy input costs and inventory mix timing; adjusted EBITDA +13.1% .

What Went Wrong

• Atkins still declining: POS -~4% (better than plan), with management removing low-ROI trade/marketing and absorbing club channel distribution losses; FY25 Atkins POS guided to decline HSD .
• Shipment timing and gross-to-net: ~3ppt shipment timing miss (2/3 at Quest tied to a single customer’s late-quarter focus) and ~1ppt gross-to-net headwind; shipments/consumption to realign by end of Q2 .
• Commodity/GM headwinds ahead: FY25 gross margin expected down ~200 bps YoY, with Q2 down ~300 bps YoY on cocoa/whey inflation and OWYN mix .

Financial Results

Quarterly performance vs prior periods

Year-over-year (Q1 FY25 vs Q1 FY24)

Brand/Channel KPIs

Q1 FY25 brand sales snapshot

Notes on non-GAAP: Q1 included ~$1.0M non-cash inventory step-up from OWYN, a ~30 bps gross margin headwind; Adjusted EBITDA and Adjusted EPS definitions/reconciliations provided in the release .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We’re pleased with our fiscal first quarter retail takeaway of about 8%... Net sales increased 10.6%, driven by the OWYN acquisition... adjusted EBITDA growth of 13.1%.” .
• “As we exited Q1 with the second [chips] line up and running, we are no longer capacity constrained… retail takeaway for Quest chips in November and December was about 35%.” .
• “OWYN… retail takeaway of 67%… we continue to have confidence we’ll double net sales in 3 to 4 years.” .
• “We reaffirm the fiscal year 2025 outlook… net sales growth in the 4% to 6% range and adjusted EBITDA growth slightly greater than the net sales increase” (ex-53rd week, as illustrative long-term). .
• “Q1 margin came in better than we thought… Our guidance for the full year holds around down 200 [bps].” .

Q&A Highlights

• Gross margin path: Q1 GM favorable due to lower-priced raw materials timing at co-mans; FY25 GM down ~200 bps; Q2 GM down ~300 bps YoY, with ~⅓ from OWYN mix; better lock visibility by April call .
• Shipments vs POS: Q1 ~3ppt timing impact (≈⅔ Quest, one customer); expect shipments and consumption to realign by end of Q2 and largely align by year-end .
• Atkins trajectory: Near-term headwinds as low-ROI trade/marketing removed and club distribution reduced; FY25 POS down HSD; actions lay groundwork for stabilization into FY26 .
• Quest bars: Bars need only LSD growth to meet long‑range plan, but innovation (Overload) and selective promo sharpen price points to defend share amid competition .
• Pricing: Announced mid-single-digit RTD price increase effective spring; pursuing productivity with fuller impact in FY26 .

Estimates Context

• Wall Street consensus from S&P Global for Q1 FY25 revenue/EPS and for prior quarters was unavailable at time of writing due to data access limits; as a result, we do not present beat/miss vs consensus for this quarter. We recommend revisiting when S&P Global data access is restored [No S&P Global values available].

Key Takeaways for Investors

• Reaffirmed FY25 outlook despite commodity inflation and Atkins headwinds; OWYN momentum and chips capacity normalization underpin top-line confidence .
• Near-term margin pressure (Q2 GM -~300 bps YoY) is likely the key stock overhang; better commodity coverage visibility expected by April, a potential de‑risking event .
• Quest chips re-acceleration with restored supply and a national club test in 1H CY25 are potential upside catalysts; Overload bar launch supports broader Quest franchise .
• Atkins reset remains deliberate: revamp continues while trimming non-economic spend; expect FY25 HSD POS declines, with stabilization aimed into FY26—watch fall ’25 resets and New Year season reads .
• OWYN scaling well (POS +67%, $32.3M Q1 net sales) with distribution runway; majority of synergies (≈80%) to be realized at start of FY26, implying FY26 margin lift .
• Balance sheet remains conservative (cash $121.8M; TTM Net Debt/Adj. EBITDA 0.8x), enabling flexibility for marketing, capacity, and potential buybacks/M&A .

All citations:
Press release/8-K: .
Q1 FY25 call: .
Q4 FY24 call/press: .
Q3 FY24 call: .