FISCAL 2024 ANNUAL REPORT ON FORM 10-K
This Fiscal Year 2024 Annual Report on Form 10-K (this “Report”) contains forward-looking statements within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”). When used anywhere in this Report, the words “expect,” “believe,”
“anticipate,” “estimate,” “intend,” “plan” and similar expressions are intended to identify forward-looking statements. 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, 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
maintainOWYNpersonnelandeffectivelyintegrateOWYN,ouroperationsbeingdependentonchangesinconsumerpreferencesandpurchasing
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 this Report, including those set forth under “Risk Factors” in the included
Form 10-K for the fiscal year ended August 31, 2024. Important factors could cause actual results to differ materially from those indicated or
implied by forward-looking statements such as those contained in documents we have filed with the U.S. Securities and Exchange Commission
(the “SEC”) and those contained in subsequent reports we will file with the SEC. All forward-looking statements in this Report are qualified
entirely by the cautionary statements included in this Report and such other filings. These risks and uncertainties or other important factors
could cause actual results to differ materially from results expressed or implied by forward-looking statements contained in this Report. These
forward-looking statements speak only as of the date of this Report. We undertake no intention or obligation to update or revise any forward-
looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law, and readers should not
rely on the forward-looking statements as representing the Company’s views as of any date subsequent to the date of the filing of this Report.
Dear Fellow Stockholders,
I am pleased to provide you with the Annual Report of The Simply Good Foods Company for Fiscal Year 2024. As I look back on the year, I am
very proud and thankful for the hard work of our talented and committed employees. In a challenging year for the U.S. food industry, we delivered
solid results driven by volume growth. Additionally, our performance during fiscal year 2024 enabled us to make smart investments in our
brands and organizational capabilities that we believe will benefit the Company in the near and long term.
The nutritional snacking category continues to be a stand-out performer within the U.S. food industry and we believe the category has a long
runway for growth. Accordingly, in addition to the investments we made in our Quest and Atkins brands during the year, we also acquired Only
What You Need, Inc. (“OWYN”), a fast growing, plant-based, allergen friendly ready-to-drink (RTD) protein shake business, which we
believe is highly complementary and a great strategic addition to our growing portfolio.
Updated Purpose and Values
I have been President and CEO of Simply Good Foods for nearly 18-months. During my first full year on the job, I personally met nearly all our
employees who are extremely passionate about the business and our brands, and proud of the wellness-focused products we provide consumers.
As an outgrowth of those conversations, we updated our corporate visual identity and developed a new purpose and set of values to capture the
unique passion, focus and energy at Simply Good Foods.
Our New Purpose:
We’re raising the bar on what food can be.
We say no to the status quo, and we say yes to making better food.
Food that offers robust nutrition, not hollow nutrition. Energy, not depletion. Enjoyment, not regret.
Simply, we’re on a mission to make food that works for you
—that is radically nutritious and defyingly delicious.
Better nutrition made easy so you can live well.
We don’t compromise, so you never have to.
Our New Values:
Simply Bold, Simply Deliver, Simply Learn & Grow, Simply Together, and Simply Kind
Our New Corporate Branding:
Recapping our financial performance
We delivered strong top and bottom-line results in fiscal 2024. Net sales increased 7.1% to $1,331.3 million, driven by Quest and Atkins
combined sales growth of about 5%. Adjusted EBITDA1, the measure we believe most accurately reflects the health of our business, increased
9.6% to $269.1 million. It is noteworthy that Adjusted EBITDA includes meaningful investments in our business in marketing, innovation and
broader organizational capabilities that will benefit the Company over the near and long term.
Only What You Need (OWYN) Acquisition
In June, we acquired OWYN, which is one of the fastest growing RTD protein shake brands in the market. The acquisition is strategically
compelling as it brings a third, complementary brand to our portfolio and enhances our presence in the fast-growing RTD shake segment.
Additionally, OWYN reaches a highly incremental consumer segment that strengthens our category-leading presence with customers. We are
confident our go-to-market capabilities will accelerate profitable growth through accelerated distribution gains, increased household penetration,
and by leveraging our cost-efficient supply chain. We will also look to enhance core product performance and unlock white-space growth
opportunities in other forms as we move through fiscal 2025. Over the last few years, OWYN’s net sales growth rate has been top tier within the
nutritional snacking category. In fiscal year 2024, OWYN net sales increased nearly 85% to $112.5 million. We are very pleased to have this
brand in our portfolio and believe this acquisition will create significant shareholder value through revenue growth, margin expansion and cost
synergies.
1 Adjusted EBITDA is a non-GAAP financial measure. Please refer to Annex I of our proxy statement for the 2024 Annual Meeting of
Stockholders for a reconciliation of this non-GAAP financial measure.
Executing our Plan and Positioning the Company for Sustained Growth
In addition to our solid net sales and earnings growth and the acquisition of OWYN, we are pleased to share the following updates:
Strong Operating Cash Flow and Rapid Debt Paydown
We generated cash flow from operations of $215.7 million, an increase of about 26% versus the year ago period. Strong cash generation is
a hallmark of the Company, enabling us to make strategic investments while maintaining a solid balance sheet position. Specifically, we
finished the fiscal year with $135.0 million of cash and cash equivalents and an outstanding principal term loan debt balance of
$400 million, resulting in a trailing 12-month Net Debt to Adjusted EBITDA ratio of 1.0x2, even after acquiring OWYN for
$280.0 million.
Quest
If you have been reading these letters for a few years you know there is no denying Quest’s momentum. Since acquiring the Quest business
in November 2019, net sales for the Quest brand have grown from $345 million to nearly $800 million. Quest retail sales in the combined
U.S. measured and unmeasured channels during fiscal 2024 were $1.1 billion with a product footprint across multiple forms. No small feat
for a brand that is about a dozen years old! Quest has been one of the most innovative brands in the category and is supported by a best-in-
class R&D and new product team. The multi-year pipeline is strong, and we expect innovation to be a lever of growth for a long time. This
year we also supported the brand with [award-winning] advertising that had an almost immediate effect on sales and which has obviously
and clearly improved brand awareness and purchase consideration.
Atkins
Atkins is the industry pioneer of the low-carb lifestyle movement, and we continue to believe in the long-term vitality of the brand given
the renewed cultural relevance and conversation on weight -much of it fueled by the new weight loss drugs. We are confident we have the
right plans in place to bring Atkins back to growth. Late in the fourth quarter of fiscal 2024, we launched many new items across the
major forms of bars, RTD protein shakes and confections and we are excited about the early performance of many of those items. The
highlights here are the Atkins Strong RTD 30-gram protein shake, a new wafer bar and Atkins Endulge confectionery gummy bears and
truffles. We also updated our brand messaging to link to the evolving consumer views and conversation on weight wellness. Notably, one of
the spots specifically positions Atkins as a sustainable way for GLP-1 users, or anyone who has lost weight, to hold onto weight loss
results without regimented dieting.
Supporting our Employees and Community
We launched our partnership with the Boys and Girls Clubs of Metro Denver, jointly creating the “Spark and Spoon Project.” This
project will provide over 28,000 kids and teens across Denver with nutrition education, healthy lifestyle programs, culinary programs,
healthy food boxes, field trips, and cooking experiences along with providing funding for a dedicated, full-time staff member to support
the programs.
Focused on Success in Fiscal 2025
We are committed to our business model of driving net sales and earnings growth while also investing in our business and brands. We remain
confident in the growth opportunities for the business moving forward and our ability to execute our initiatives. As we move through fiscal 2025,
we believe we have the financial flexibility to invest in brand building initiatives that should continue to generate solid top-line growth and
capture the opportunities ahead. In our October 2024 earnings materials, we stated fiscal year 2025 results are expected to be in line with our
long-term algorithm (net sales growth in the 4-6% range and Adjusted EBITDA growth slightly greater than the net sales increase) assuming a
comparable full year of OWYN results are included in fiscal 2024 as well as the exclusion of the fifty-third week in fiscal year 2024.
We continue to focus on profitable, organic growth as a primary path to increasing shareholder value. The diversification of our business across
brands, product forms and retail channels provide us with multiple ways to win in the marketplace. Our growth is underpinned by world-class
marketing and innovation that resonates with consumers supported with leading go-to market capabilities. In fiscal 2025 it will be no different.
In closing, I would like to thank our employees along with our valued customers and supply chain partners for a great year. Additionally, I want to
thank our Board of Directors for their ongoing strong engagement and collaboration. With the continued guidance and leadership of our
management team and Board, I am confident we will achieve our fiscal year 2025 objectives while also positioning the business for sustainable
growth.
2 Net Debt to Adjusted EBITDA is a non-GAAP financial measure. Please refer to Annex I of our proxy statement for the 2024 Annual
Meeting of Stockholders for a reconciliation of this non-GAAP financial measure.
Lastly, on behalf of our Board, employees and myself, I want to thank you, our shareholders, for your investment in The Simply Good Foods
Company and your confidence in us to continue to build shareholder value. We hope you and your families remain healthy and safe.
Sincerely,
Geoff Tanner
President & Chief Executive Officer
[This Page Intentionally Left Blank]
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