The Simply Good Foods Company Q1 FY2026 earnings call

Management Statement and Operational Highlights

• Q1 Performance: Pleased with Q1 performance, reaffirming full year outlook. Consumption grew 2%, led by Quest and OWYN.
• Growth Drivers: Quest and OWYN benefited from expanded distribution, marketing, and innovation. Nutritional snacking category grew 10%.
• Margin Initiatives: Recent pricing actions reflected on shelf, productivity program delivering results, and favorable input cost locks (e.g., cocoa).
• Product Innovation: Quest Salty saw strong growth with new flavors, pack sizes, and channel-specific packs. OWYN had new formula shipping since August to address product quality issues. Atkins rolled out 4-pack meal bars and updated marketing.
• Share Repurchase: Borrowed $150M to accelerate share buyback, with Board authorizing $200M increase to repurchase program.

Segment Performance

• Quest: Q1 net sales grew nearly 10%, driven by 12% consumption growth. Salty snacks saw 40% consumption growth, with household penetration for Quest Salty surpassing 10%. Quest Bars were flat vs prior year, but initiatives like Overload and Taste Forward Crispy line were noted. Net sales contribution from Quest and OWYN combined was 71%.
• Atkins: Net sales declined 17%, consumption down 19%, but net sales paced slightly ahead of expectations. Distribution losses were a key headwind, but initiatives like 4-pack meal bars and updated marketing showed positive signs.
• OWYN: Net sales declined 3%, but consumption was up 18%. Household penetration rose to 4.5%, and there's confidence in leveraging Simply Good's scale for growth.

Guidance

• Reaffirm full year outlook for net sales (range -2% to +2%) and adjusted EBITDA (range -4% to +1%).
• Q2 expected to be weakest quarter for consumption and net sales growth, with net sales declining 3.5%-4.5%.
• Second half expected to be stronger, with net sales growth at higher end of full year range, gross margins improving, and adjusted EBITDA expected to strengthen, particularly in Q4.
• Capital expenditures expected in $30M-$40M range due to co-investment for salty snacks capacity.

Risks

• Economic conditions and consumer purchasing behavior uncertainties.
• Tariff and cocoa price fluctuations.
• Product quality perception issues for OWYN.
• Distribution challenges and competitive dynamics in certain segments.

Question and Answer Q: Peter Grom asked about confidence in back half inflection and risks.

A: Geoff Tanner stated it's playing out as expected, with new distribution, merchandising gains, and innovation pipeline underpinning confidence. Chris Bealer added EBITDA tracks gross margin trajectory.

Q: Brian Holland inquired about Quest Bars flat performance.

A: Geoff Tanner said a multipronged plan including innovation, merchandising, distribution, and marketing is in place to reaccelerate bar business.

Q: Megan Clapp asked about OWYN's consumption and margin.

A: Geoff Tanner and Chris Bealer discussed consumption aligning with shipments, and margin confidence for FY '27 based on supply coverage.

Q: Alexia Howard questioned margins and cost synergy from OWYN.

A: Christopher Bealer explained margin rebuilding through pricing, productivity, mix, and OWYN cost synergies.

Q: Jon Andersen asked about sales composition and Atkins assortment.

A: Christopher Bealer said pricing had minimal impact in Q1, and Geoff Tanner noted Atkins' top half category velocity SKUs with plans to repurpose tail SKUs.

Q: Robert Moskow asked about GLP-1 study for Atkins.

A: Geoff Tanner discussed the pilot study showing encouraging results and plans to leverage findings in marketing and retailer outreach.

Q: Steve Powers asked about Quest Salty distribution and OWYN innovation.

A: Geoff Tanner highlighted confidence in Quest Salty's momentum with innovation and distribution gains, and OWYN has a strong innovation pipeline.

Q: Tyler Prause asked about RTD growth and portfolio.

A: Geoff Tanner said OWYN is differentiated in clean plant-based, Quest is differentiated in high protein, and Atkins has a different role in RTDs.