Simply Good Foods Co SEC 10-K Report
The Simply Good Foods Company, a leading player in the nutritious snacking industry, has released its annual 10-K report, providing a comprehensive overview of its financial and operational performance for the fiscal year. The report highlights significant growth in net sales, strategic acquisitions, and the challenges faced in a competitive market. This article summarizes the key financial metrics, business performance, strategic initiatives, and risks outlined in the report.
Financial Highlights
Net Sales: $1,450.9 million, representing an increase of $119.6 million, or 9.0%, compared to the previous period, primarily driven by Quest and OWYN volume growth.
Gross Profit: $525.7 million, an increase of $14.2 million, or 2.8%, with a gross profit margin of 36.2%, a decrease of 220 basis points from the prior period due to unfavorable commodity expenses and lower margins from the OWYN business.
Income from Operations: $156.9 million, a decrease from $206.5 million in the previous period, impacted by higher operating expenses, including a significant loss on impairment.
Net Income: $103.6 million, a decrease of $35.7 million from the previous period, driven by higher operating expenses and partially offset by higher gross profit and lower interest expense.
Diluted EPS: $1.02, compared to $1.38 in the previous period, reflecting the decrease in net income.
Business Highlights
Revenue Segments: The Simply Good Foods Company operates primarily through its Quest, Atkins, and OWYN brands, focusing on protein bars, ready-to-drink shakes, and other nutritious snacks. Quest and OWYN have shown volume growth, while Atkins has experienced a decline due to reduced distribution.
Geographical Performance: The company's products are primarily distributed in North America, with international sales representing approximately 2.0% of total net sales, mainly in Australia and New Zealand.
Sales Units: The company has a strong presence in mass retail, grocery, and convenience store channels, with significant sales through e-commerce platforms. Approximately 76% of Quest's, 81% of Atkins', and 73% of OWYN's gross sales in the U.S. were through these channels.
New Product Launches: Simply Good Foods continues to innovate with new flavors and forms, particularly in the Quest and OWYN brands, to meet consumer demand for higher protein and plant-based products.
Future Outlook: The company plans to bolster its Atkins brand by focusing on high-performing products and replacing lower-performing ones with Quest and OWYN offerings. It also aims to expand its distribution channels and increase its e-commerce presence.
Operational Strategy: Simply Good Foods leverages an asset-light business model, relying on contract manufacturers for production, which allows for flexibility and quick market response. The company focuses on consumer insights and innovation to drive product development.
Market Trends: The company aligns with consumer trends towards convenient, protein-rich, low-carb, and low-sugar snacks, aiming to capitalize on the growing demand for nutritious snacking options.
Leadership and Management: The company is led by an experienced team with extensive expertise in branded consumer products, which is crucial for driving future growth and operational success.
Strategic Initiatives
Acquisition of OWYN: The Simply Good Foods Company completed the acquisition of Only What You Need, Inc. (OWYN), a plant-based protein food company, for approximately $281.9 million. This acquisition is part of the company's strategy to expand its wellness platform and diversify its product offerings to include plant-based options.
Capital Management: The company has been actively managing its capital through various initiatives. It repurchased 1,592,471 shares of common stock at an average price of $31.95 during the fiscal year ended August 30, 2025, under its stock repurchase program, which had approximately $20.7 million remaining for repurchases. Additionally, the company increased the principal borrowed on its Term Facility by $250 million to finance the OWYN acquisition. The outstanding balance of the Term Facility was $250 million as of August 30, 2025, with no amounts drawn against the Revolving Credit Facility. The company also reduced its interest expense by repricing its Term Loans and extending the maturity date of its credit facilities.
Future Outlook: Looking ahead, Simply Good Foods plans to continue its focus on strategic acquisitions and organic growth to strengthen its position in the nutritious snacking market. The company intends to manage its capital efficiently by exploring opportunities for debt reduction and maintaining flexibility for future investments. The Board of Directors approved a $150 million increase to the existing stock repurchase program, indicating a commitment to returning value to shareholders while supporting long-term growth initiatives.
Challenges and Risks
Changing Consumer Preferences: The company faces significant risks related to changing consumer preferences in the nutritional snacking industry. As consumer trends evolve, products once considered healthy may become disfavored, impacting brand loyalty and sales. Additionally, the rise of weight management medications could reduce demand for nutritional snacks.
Competitive Market: The company competes in a highly competitive market with numerous multinational and local competitors, which could lead to reduced sales and price pressures.
Supply Chain Constraints: Supply chain constraints and inflationary pressures are affecting operations, with increased costs for ingredients, packaging, and labor. The company may not be able to pass these costs onto consumers without affecting sales volumes. Furthermore, the company relies on a limited number of suppliers and contract manufacturers, which poses risks if there are disruptions in supply or manufacturing capabilities.
Regulatory Risks: Regulatory risks include potential changes in FDA regulations that could affect product labeling and marketing. The company must also navigate conflicts between state and federal laws regarding ingredient definitions and labeling requirements.
Management Strategies: Management is focused on implementing growth strategies, including expanding the product portfolio and securing additional shelf space in retail outlets. However, failure to successfully implement these strategies could adversely affect revenue and profitability. The company is also addressing supply chain challenges by seeking cost-saving measures and price adjustments, though these may not fully offset increased costs.
Market Risks: The company is exposed to market risks, including fluctuations in ingredient and packaging costs due to global competition, currency exchange rates, and geopolitical events. Additionally, the company’s debt arrangements bear interest at variable rates, which could increase interest expenses if market rates rise. The company’s financial performance is also vulnerable to changes in consumer spending due to economic downturns or inflationary pressures.
SEC Filing: Simply Good Foods Co [ SMPL ] - 10-K - Oct. 28, 2025