Simply Good Foods: Nutritional Snacking Boom Drives 10.6% Revenue Growth in Q1

The Simply Good Foods Company (SMPL) reported a strong start to the fiscal year, with net sales increasing by 10.6% to $341.3 million in the first quarter ended November 30, 2024. The company's CEO, Geoff Tanner, highlighted the rise in popularity of nutritional snacking as a key driver of this growth. This trend is evident in the category's 12% growth in the measured channel universe, driven primarily by volume or unit growth.



The acquisition of Only What You Need, Inc. (OWYN) also contributed significantly to SMPL's revenue growth. OWYN net sales were $32.3 million in the first quarter, slightly greater than estimates and a key driver of the company's 10.6% net sales growth. This acquisition aligns with SMPL's overall strategy of expanding its portfolio of branded nutritional foods and snacking products to meet the growing demand for high protein, low-sugar, and low-carb foods.

SMPL's first quarter retail takeaway in the combined U.S. measured and unmeasured channels increased about 8%, driven by strong Quest and OWYN point-of-sales growth of about 10% and 67%, respectively. Atkins retail takeaway was off about 4% but was slightly better than estimates. Gross profit was $130.5 million, an increase of $15.4 million year over year, driven by favorable legacy input costs and the inclusion of OWYN. Gross margin was 38.2%, a 90 basis points increase from last year.



Tanner noted that the company has strong marketing plans in place to support all its brands in the upcoming "New Year, New You" season, which should result in solid overall volume-driven growth. With three uniquely positioned brands aligned with consumer megatrends and world-class innovation and sales capabilities, SMPL is well-positioned to drive sustainable growth and increase shareholder value.

The company reaffirmed its fiscal year 2025 outlook, expecting net sales to increase 8.5% to 10.5% and adjusted EBITDA to rise 4% to 6%. Assuming comparable OWYN results and the exclusion of the fifty-third week in fiscal year 2024, fiscal year 2025 is expected to align with the company's long-term plan, with net sales growth of 4% to 6% and adjusted EBITDA growth slightly higher than sales growth.

In conclusion, Simply Good Foods' strong first quarter results, driven by the rise in popularity of nutritional snacking and the successful integration of OWYN, position the company well for continued growth and success in the coming years.