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    Simply Good Foods (SMPL)

    Q4 2024 Earnings Summary

    Reported on Apr 21, 2025
    Pre-Earnings PriceN/ADate unavailable
    Post-Earnings PriceN/ADate unavailable
    Price ChangeN/A
    • Strong Innovation & Marketing Momentum: Management highlighted accelerated product innovation on the Quest platform—including the early success of the overload bar and a robust “cheating” marketing campaign that immediately lifted sales—and indicated plans to increase advertising spend by about 20% in fiscal 2025, positioning Quest for significant competitive gains.
    • Successful OWYN Integration & Growth Potential: The Q&A detailed that the OWYN acquisition is performing exceptionally well—with current growth around 80% and guidance of 20%-30% growth in fiscal 2025—and emphasized that capacity is not an issue, underscoring OWYN as a potent driver for expanding the company’s plant-based segment.
    • Solid Cash Generation & Capital Allocation Strategy: Executives noted strong operating cash flows (over $215 million) and robust cash on the balance sheet, coupled with an active capital allocation plan that includes evaluating share repurchases and other return initiatives, which supports long‑term shareholder value.
    • Atkins Decline: Management expects an accelerated negative decline in Atkins’ net sales due to planned reductions in trade and marketing investments, which could delay a return to positive organic growth until fiscal 2026 .
    • Supply Chain Disruptions: Ongoing temporary chip supply constraints in Quest, which have already resulted in stock outs and lower weekly sales, pose a risk to sustaining growth momentum ** **.
    • Competitive Pressure on Quest Bars: Increased competition from smaller brands through aggressive pricing and promotions could erode Quest bars' market share and compress revenue growth .
    1. Capital Allocation
      Q: Thoughts on FY25 capital allocation?
      A: Management emphasized strong cash generation with over $100M in cash, and they are evaluating the best methods to return cash through share repurchases, debt paydown, or M&A opportunities.

    2. Atkins Sales Outlook
      Q: When will Atkins return to organic growth?
      A: Management expects a negative sales decline in FY25 driven by reduced trade and marketing spend, with steps already in motion to reposition the brand for a rebound by FY26.

    3. Legacy Growth Phasing
      Q: How will legacy business growth phase?
      A: They indicated that phased, quarterly growth will come from incremental distribution improvements for Quest and targeted trade optimizations for Atkins, supporting about 3% like-for-like growth.

    4. Quest Club Rollout
      Q: What is the impact of the Quest club rollout?
      A: Management is cautiously optimistic, noting that a successful regional test is being expanded nationwide with the potential for significant upside, though no specific figures were provided.

    5. Quest Chips Rebound
      Q: Are Quest chips returning to normal levels?
      A: Management expects Quest chips to recover to roughly $5M per week by the end of October, helped by the activation of a second production line to address earlier supply constraints.

    6. OWYN Capacity
      Q: Are there capacity limits for OWYN in FY25?
      A: They assured that there are no capacity issues, as the network expansion from the OWYN acquisition has effectively resolved previous constraints.

    7. OWYN Market Impact
      Q: How will OWYN affect the plant-based shake market?
      A: OWYN is capturing mainstream appeal with its clean label, achieving impressive growth of around 80% in certain channels, and is expected to leverage the Quest playbook for broader market impact.

    8. Marketing Effectiveness
      Q: How effective are current marketing campaigns?
      A: The Quest full-year advertising campaign is driving meaningful sales uplift—with around a 20% increase in ad investments—while Atkins’ refreshed campaigns are in early stages with controlled spending to optimize ROI.

    9. Quest Bars Competition
      Q: What about rising competition in Quest bars?
      A: Despite competitive pressures, management expects mid-single-digit growth for Quest bars and is planning to boost innovation—especially with the launch of the overload platform—to defend their market leadership.

    10. Atkins Trade Adjustments
      Q: Does reduced trade spending affect Atkins’s performance?
      A: Reduced trade and merchandising spending is expected to lead to a softer start for Atkins in FY25, although ongoing innovation and cost rationalization should drive sequential improvement later in the period.

    11. Innovation Incrementality
      Q: How are new innovation launches performing?
      A: The response to new launches has been encouraging—Quest’s bake shop items and Atkins’ replacement SKUs are showing about double the velocity compared to earlier offerings, signaling promising incremental performance.

    Research analysts covering Simply Good Foods.