The Simply Good Foods Company (SMPL) Q2 2025 earnings summary

Executive summary

• Q2 net sales increased 15.2% year-over-year to $359.7 million, driven by Quest and OWYN growth, with OWYN contributing $33.8 million and organic growth at 4.4%.

• Net income rose 10.9% to $36.7 million, and Adjusted EBITDA grew 17.6% to $68.0 million.

• Retail takeaway up 7% overall, with Quest and OWYN up 13% and 52% respectively, while Atkins declined 10%.

• Gross margin declined 120 basis points to 36.2% due to OWYN integration and related inventory step-up.

• The OWYN acquisition was completed in June 2024 for $281.9 million, expanding the plant-based portfolio.

Financial highlights

• Q2 net sales: $359.7 million, up 15.2% year-over-year; organic growth 4.4%, OWYN contributed $33.8 million.

• Q2 gross profit: $130.1 million (36.2% margin), up 11.4% year-over-year.

• Q2 Adjusted EBITDA: $68.0 million (18.9% margin), up 17.6%; net income: $36.7 million, up 10.9%.

• Q2 Adjusted Diluted EPS: $0.46, up from $0.40 last year.

• Cash at quarter-end was $103.7 million; term loan balance: $300 million after $100 million repaid year-to-date.

Outlook and guidance

• FY25 net sales expected to grow 8.5%-10.5%, with OWYN contributing $140-$150 million.

• Adjusted EBITDA projected to increase 4%-6%; gross margin to decline ~200 bps due to inflation and tariffs.

• Net interest expense forecasted at $21-$23 million; effective tax rate at 24%.

• Net leverage expected to finish FY25 around 0.5x as term loan repayments continue.

• 53rd week in FY24 is a 2-point headwind to FY25 growth rates.