The Simply Good Foods Company Reports Fiscal Third Quarter 2024 Financial Results and Updates Full Fiscal Year 2024 Outlook
The Simply Good Foods Company reported its fiscal third quarter 2024 results on June 27, 2024. Net sales increased 3.1% to $334.8 million, driven by Quest volume. Net income rose to $41.3 million, with diluted EPS at $0.41. Adjusted diluted EPS was $0.50, and adjusted EBITDA reached $71.9 million. For the full fiscal year, the company anticipates net sales growth around the mid-point of its 4-6% target and adjusted EBITDA growth of about 8%. The acquisition of Only What You Need (OWYN) is expected to contribute $25-30 million in net sales for fiscal 2024. Gross margin improved by 320 basis points to 39.9% due to lower ingredient and packaging costs.
- Net sales increased by 3.1% to $334.8 million.
- Net income grew to $41.3 million from $35.4 million.
- EPS rose to $0.41 from $0.35.
- Adjusted diluted EPS improved to $0.50 from $0.44.
- Adjusted EBITDA increased to $71.9 million from $66.6 million.
- Gross margin improved by 320 basis points to 39.9%.
- Full year net sales expected to grow around the mid-point of 4-6%.
- Full year adjusted EBITDA expected to grow by about 8%.
- OWYN acquisition expected to add $25-30 million in net sales for fiscal 2024.
- International net sales declined by 2.4%.
Insights
The financial results for Simply Good Foods in Q3 2024 reveal a steady growth trajectory. Net sales increased by
The company's Gross Margin saw an impressive improvement of
Further, the Adjusted EBITDA rose from
In terms of future outlook, the company's reaffirmed expectations of a mid-point increase in legacy net sales of
Retail investors should consider these results as a strong indicator of the company’s current financial health and potential for steady growth, albeit with attention to how the recent acquisition will be managed and integrated.
The results showcase that Quest continues to drive Simply Good Foods' performance, with a
Conversely, Atkins saw a
Regarding the RTD shake market, the acquisition of OWYN is a strategic move to tap into a rapidly expanding segment, diversifying the product mix and catering to a broader consumer base. The ability to leverage Simply Good Foods' distribution and marketing capabilities could result in higher profitability margins for OWYN products.
Retail investors should factor in these brand-specific dynamics while evaluating Simply Good Foods' market performance. The success of Quest's advertising, the effectiveness of Atkins' revitalization and OWYN’s integration will significantly influence the company's market position and future growth.
The financial results and subsequent acquisition of OWYN by Simply Good Foods highlight the company’s strategic move to expand its market footprint. From a legal perspective, the successful completion of this acquisition is important as it involves substantial financial implications and integration processes. The acquisition was financed through a combination of cash and an additional term loan of
The interest rate components tied to SOFR plus a credit spread adjustment are noteworthy. Investors should pay attention to the company's ability to manage and service this debt effectively, especially under varying economic conditions that could influence interest rates.
Moreover, the company’s targeted net debt to Adjusted EBITDA ratio of
Retail investors should consider the legal and financial ramifications of the increased debt from the acquisition, ensuring that Simply Good Foods maintains a balanced approach to leveraging growth opportunities without overstretching its financial commitments.
DENVER, June 27, 2024 (GLOBE NEWSWIRE) -- The Simply Good Foods Company (Nasdaq: SMPL) (“Simply Good Foods,” or the “Company”), a developer, marketer and seller of branded nutritional foods and snacking products, today reported financial results for the thirteen and thirty-nine weeks ended May 25, 2024. The Company completed the acquisition of Only What You Need, Inc. ("OWYN") on June 13, 2024, therefore, fiscal third quarter 2024 results exclude the performance of this brand. The reference to "legacy" Simply Good Foods in this press release encompasses Simply Good Foods' business excluding OWYN.
Third Quarter Summary:(1)
- Net sales of
$334.8 million versus$324.8 million - Net income of
$41.3 million versus$35.4 million - Earnings per diluted share (“EPS”) of
$0.41 versus$0.35 - Adjusted Diluted EPS(2) of
$0.50 versus$0.44 - Adjusted EBITDA(4)
$71.9 million versus$66.6 million
Full fiscal year 2024 Net Sales and Adjusted EBITDA(3) outlook(4):
- Reaffirm “legacy” Simply Good Foods, excluding OWYN, net sales outlook for the full fiscal year
- Net sales expected to increase around the mid-point of the Company’s long-term algorithm of 4
-6% , including the benefit of a fifty-third week. OWYN net sales are expected to be in the$25 -30 million range
- Net sales expected to increase around the mid-point of the Company’s long-term algorithm of 4
- Total Simply Good Foods Adjusted EBITDA(3), expected to increase about
8% versus a previous 6-8%
“Simply Good Foods third quarter results were led by continued Quest growth, improving Atkins marketplace trends as well as strong gross margin performance,” said Geoff Tanner, President, and Chief Executive Officer of Simply Good Foods. “Third quarter retail takeaway of
“I am very pleased we completed the acquisition of OWYN on June 13, 2024. We believe this represents a strategic win for the Company as it introduces a third complementary brand, significantly strengthening our position in the rapidly expanding RTD shake market, opens the door to a new consumer segment, and solidifies our leading position with retail partners. We also believe our scaled go-to-market capabilities will drive profitable growth through enhanced distribution, greater household penetration and a cost-efficient supply chain.”
“We are confident in our strategy and execution and believe we are positioned to drive sustained profitable growth. For the full fiscal year 2024, we continue to anticipate legacy Simply Good Foods net sales will increase around the mid-point of the Company’s long-term algorithm of 4
Third Quarter 2024 Results
Net sales increased
Total Simply Good Foods retail takeaway for the thirteen weeks ended May 26, 2024, in the combined U.S. measured and unmeasured channels increased about
Gross profit was
In the third quarter of fiscal 2024, the Company reported net income of
Operating expenses of
In the third quarter of fiscal 2024, the Company incurred costs related to the OWYN acquisition of
Net interest income and interest expense was
Adjusted EBITDA(3), a non-GAAP financial measure used by the Company that makes certain adjustments to net income calculated under GAAP, was
In the third quarter of fiscal 2024, the Company reported earnings per diluted share (“Diluted EPS”) of
Adjusted Diluted EPS(3), a non-GAAP financial measure used by the Company that makes certain adjustments to Diluted EPS calculated under GAAP, was
Year-to-Date Third Quarter 2024 Highlights vs. Year-to-Date Third Quarter 2023(1)
- Net sales were
$955.6 million versus$922.3 million - Net income of
$110.0 million versus$96.9 million - Earnings per diluted share (“EPS”) of
$1.09 versus$0.96 - Adjusted Diluted EPS(2) of
$1.33 versus$1.18 - Adjusted EBITDA(4) of
$191.7 million versus$178.3 million
Net sales increased
Gross profit was
Net income was
Operating expenses of
Net interest income and interest expense was
Adjusted EBITDA(4), a non-GAAP financial measure used by the Company that makes certain adjustments to net income calculated under GAAP, increased
For the year-to-date third quarter fiscal 2024, the Company reported Diluted EPS of
Adjusted Diluted EPS(3), a non-GAAP financial measure used by the Company that makes certain adjustments to Diluted EPS calculated under GAAP, was
Balance Sheet and Cash Flow
At the end of the third quarter of fiscal 2024, the Company had cash of
Subsequent to the end of the third quarter, on June 13, 2024, the Company completed the acquisition of OWYN. Simply Good Foods funded the cash purchase price of
Outlook(4)
While early, fourth quarter fiscal 2024 retail takeaway for Quest and Atkins are tracking to the Company’s estimates. As such, the Company reaffirms "legacy" Simply Good Foods, excluding OWYN, net sales outlook for the full fiscal year. Specifically, legacy net sales are expected to increase around the mid-point of the Company’s long-term algorithm of 4
The year-to-date strong gross margin expansion has provided the Company with flexibility to meaningfully invest in marketing and growth initiatives to drive earnings growth. Therefore, for the full year fiscal 2024, the Company expects Adjusted EBITDA(3), including OWYN, to increase about
___________________________________
(1) All comparisons for the third quarter ended May 25, 2024, versus the third quarter ended May 27, 2023.
(2) Adjusted Diluted Earnings Per Share is a non-GAAP financial measure. The Company excludes acquisition-related costs, such as business transaction costs, integration expense and depreciation and amortization expense in calculating Adjusted Diluted Earnings Per Share. Please refer to "Reconciliation of Adjusted Diluted Earnings Per Share" in this press release for an explanation and reconciliation of this non-GAAP financial measure.
(3) Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") is a non-GAAP financial measure. Please refer to "Reconciliation of Adjusted Diluted Earnings Per Share" in this press release for an explanation and reconciliation of this non-GAAP financial measure.
(4) The Company does not provide a forward-looking reconciliation of Adjusted Diluted Earnings Per Share to Earnings Per Share or Adjusted EBITDA to Net Income, the most directly comparable GAAP financial measures, expected for 2024, because we are unable to provide such a reconciliation without unreasonable effort due to the unavailability of reliable estimates for certain components of consolidated net income and the respective reconciliations, and the inherent difficulty of predicting what the changes in these components will be throughout the fiscal year. As these items may vary greatly between periods, we are unable to address the probable significance of the unavailable information, which could significantly affect our future financial results.
(5) Combined IRI MULO + C-store and Company unmeasured channel estimate for the 13-weeks ending May 26, 2024.
(6) Net Debt to Adjusted EBITDA is a non-GAAP financial measure which Simply Good Foods defines as the total debt outstanding under our credit agreement with Barclays Bank PLC and other parties ("Credit Agreement"), reduced by cash and cash equivalents, and divided by the Company's estimated full fiscal year 2024 Adjusted EBITDA, as previously defined. The Company does not provide a forward-looking reconciliation of Net Debt to Adjusted EBITDA to Net Debt to Consolidated Net Income, the most directly comparable GAAP financial measures, expected for 2024, because we are unable to provide such a reconciliation without unreasonable effort due to the unavailability of reliable estimates for certain components of consolidated net income and the respective reconciliations, and the inherent difficulty of predicting what the changes in these components will be throughout the fiscal year. As these items may vary greatly between periods, we are unable to address the probable significance of the unavailable information, which could significantly affect our future financial results.
Conference Call and Webcast Information
The Company will host a conference call with members of the executive management team to discuss these results today, Thursday, June 27, 2024, at 7:00 a.m. Mountain time (9:00 a.m. Eastern time). Investors interested in participating in the live call can dial 877-407-0792 from the U.S. and International callers can dial 201-689-8263. In addition, the call and accompanying presentation slides will be broadcast live over the Internet hosted at the “Investor Relations” section of the Company's website at http://www.thesimplygoodfoodscompany.com. A telephone replay will be available approximately two hours after the call concludes and will be available through July 4, 2024, by dialing 844-512-2921 from the U.S., or 412-317-6671 from international locations, and entering confirmation code 13746996.
About The Simply Good Foods Company
The Simply Good Foods Company (Nasdaq: SMPL), headquartered in Denver, Colorado, is a consumer packaged food and beverage company that is bringing nutritious snacking with ambitious goals to raise the bar on what food can be with trusted brands and innovative products. Our product portfolio consists primarily of protein bars, ready-to-drink (RTD) shakes, sweet and salty snacks, and confectionery products marketed under the Atkins™, Quest™, and OWYN™ brands. We are a company that aims to lead the nutritious snacking movement and is poised to expand our healthy lifestyle platform through innovation, organic growth, and investment opportunities in the snacking space. To learn more, visit http://www.thesimplygoodfoodscompany.com.
Investor Contact
Mark Pogharian
Vice President, Investor Relations, Treasury and Business Development
The Simply Good Foods Company
(720) 768-2681
mpogharian@simplygoodfoodsco.com
Forward Looking Statements
Certain statements made herein are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by or include words such as “will”, “expect”, “intends” or other similar words, phrases or expressions. 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 risks and uncertainties relate to, among other things, our ability to achieve our estimates of OWYN’s net sales and Adjusted EBITDA and our anticipated synergies from the acquisition of OWYN, our net leverage ratio post-acquisition, our Adjusted EPS post-acquisition, our ability to maintain OWYN personnel and effectively integrate OWYN, our operations being dependent on changes in consumer preferences and purchasing 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 the Company’s Form 10-K, Form 10-Q, and Form 8-K reports (including all amendments to those reports) filed with the U.S. Securities and Exchange Commission from time to time. In addition, forward-looking statements provide the Company’s expectations, plans or forecasts of future events and views as of the date of this communication. Except as required by law, the Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date and cautions investors not to place undue reliance on any such forward-looking statements. These forward-looking statements should not be relied upon as representing the Company’s assessments as of any date subsequent to the date of this communication.
| The Simply Good Foods Company and Subsidiaries Consolidated Balance Sheets (Unaudited, dollars in thousands, except share and per share data) | ||||||||
| May 25, 2024 | August 26, 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 208,681 | $ | 87,715 | ||||
| Accounts receivable, net | 146,281 | 145,078 | ||||||
| Inventories | 105,921 | 116,591 | ||||||
| Prepaid expenses | 8,645 | 6,294 | ||||||
| Other current assets | 11,823 | 15,974 | ||||||
| Total current assets | 481,351 | 371,652 | ||||||
| Long-term assets: | ||||||||
| Property and equipment, net | 22,037 | 24,861 | ||||||
| Intangible assets, net | 1,096,538 | 1,108,119 | ||||||
| Goodwill | 543,134 | 543,134 | ||||||
| Other long-term assets | 42,570 | 49,318 | ||||||
| Total assets | $ | 2,185,630 | $ | 2,097,084 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 56,504 | $ | 52,712 | ||||
| Accrued interest | 1,372 | 1,940 | ||||||
| Accrued expenses and other current liabilities | 34,823 | 35,062 | ||||||
| Current maturities of long-term debt | 2 | 143 | ||||||
| Total current liabilities | 92,701 | 89,857 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt, less current maturities | 237,661 | 281,649 | ||||||
| Deferred income taxes | 128,549 | 116,133 | ||||||
| Other long-term liabilities | 33,407 | 38,346 | ||||||
| Total liabilities | 492,318 | 525,985 | ||||||
| See commitments and contingencies (Note 9) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, | — | — | ||||||
| Common stock, | 1,025 | 1,019 | ||||||
| Treasury stock, 2,365,100 shares and 2,365,100 shares at cost at May 25, 2024 and August 26, 2023, respectively | (78,451 | ) | (78,451 | ) | ||||
| Additional paid-in-capital | 1,315,005 | 1,303,168 | ||||||
| Retained earnings | 457,974 | 347,956 | ||||||
| Accumulated other comprehensive loss | (2,241 | ) | (2,593 | ) | ||||
| Total stockholders’ equity | 1,693,312 | 1,571,099 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,185,630 | $ | 2,097,084 | ||||
| The Simply Good Foods Company and Subsidiaries Consolidated Statements of Income and Comprehensive Income (Unaudited, dollars in thousands, except share and per share data) | ||||||||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||
| May 25, 2024 | May 27, 2023 | May 25, 2024 | May 27, 2023 | |||||||||||||
| Net sales | $ | 334,757 | $ | 324,792 | $ | 955,634 | $ | 922,254 | ||||||||
| Cost of goods sold | 201,131 | 205,546 | 590,020 | 589,284 | ||||||||||||
| Gross profit | 133,626 | 119,246 | 365,614 | 332,970 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling and marketing | 36,464 | 30,168 | 103,097 | 88,650 | ||||||||||||
| General and administrative | 31,543 | 30,510 | 88,426 | 82,085 | ||||||||||||
| Depreciation and amortization | 4,142 | 4,363 | 12,711 | 13,035 | ||||||||||||
| Business transaction costs | 2,703 | — | 2,703 | — | ||||||||||||
| Total operating expenses | 74,852 | 65,041 | 206,937 | 183,770 | ||||||||||||
| Income from operations | 58,774 | 54,205 | 158,677 | 149,200 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 881 | 407 | 2,895 | 660 | ||||||||||||
| Interest expense | (5,028 | ) | (7,649 | ) | (16,658 | ) | (23,201 | ) | ||||||||
| (Loss) gain on foreign currency transactions | (12 | ) | 180 | 191 | 74 | |||||||||||
| Other income | 102 | 4 | 108 | 10 | ||||||||||||
| Total other expense | (4,057 | ) | (7,058 | ) | (13,464 | ) | (22,457 | ) | ||||||||
| Income before income taxes | 54,717 | 47,147 | 145,213 | 126,743 | ||||||||||||
| Income tax expense | 13,383 | 11,716 | 35,195 | 29,810 | ||||||||||||
| Net income | $ | 41,334 | $ | 35,431 | $ | 110,018 | $ | 96,933 | ||||||||
| Other comprehensive income: | ||||||||||||||||
| Foreign currency translation, net of reclassification adjustments | 95 | (262 | ) | 352 | (431 | ) | ||||||||||
| Comprehensive income | $ | 41,429 | $ | 35,169 | $ | 110,370 | $ | 96,502 | ||||||||
| Earnings per share from net income: | ||||||||||||||||
| Basic | $ | 0.41 | $ | 0.36 | $ | 1.10 | $ | 0.98 | ||||||||
| Diluted | $ | 0.41 | $ | 0.35 | $ | 1.09 | $ | 0.96 | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 100,024,230 | 99,518,546 | 99,852,203 | 99,404,174 | ||||||||||||
| Diluted | 101,270,163 | 100,909,972 | 101,240,471 | 100,847,970 | ||||||||||||
| The Simply Good Foods Company and Subsidiaries Consolidated Statements of Cash Flows (Unaudited, dollars in thousands) | ||||||||
| Thirty-Nine Weeks Ended | ||||||||
| May 25, 2024 | May 27, 2023 | |||||||
| Operating activities | ||||||||
| Net income | $ | 110,018 | $ | 96,933 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 15,871 | 15,044 | ||||||
| Amortization of deferred financing costs and debt discount | 1,213 | 2,011 | ||||||
| Stock compensation expense | 13,209 | 10,456 | ||||||
| Estimated credit (gains) losses | (167 | ) | 206 | |||||
| Unrealized loss on foreign currency transactions | (191 | ) | (74 | ) | ||||
| Deferred income taxes | 12,416 | 11,696 | ||||||
| Amortization of operating lease right-of-use asset | 5,265 | 5,018 | ||||||
| Other | 2,329 | 759 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | (716 | ) | (13,334 | ) | ||||
| Inventories | 9,423 | 19,444 | ||||||
| Prepaid expenses | (2,309 | ) | (745 | ) | ||||
| Other current assets | 2,248 | (1,595 | ) | |||||
| Accounts payable | 3,370 | (16,115 | ) | |||||
| Accrued interest | (568 | ) | (117 | ) | ||||
| Accrued expenses and other current liabilities | (705 | ) | (15,030 | ) | ||||
| Other assets and liabilities | (3,951 | ) | (4,145 | ) | ||||
| Net cash provided by operating activities | 166,755 | 110,412 | ||||||
| Investing activities | ||||||||
| Purchases of property and equipment | (1,838 | ) | (10,108 | ) | ||||
| Investments in intangible and other assets | (507 | ) | (338 | ) | ||||
| Net cash used in investing activities | (2,345 | ) | (10,446 | ) | ||||
| Financing activities | ||||||||
| Proceeds from option exercises | 4,292 | 5,035 | ||||||
| Tax payments related to issuance of restricted stock units and performance stock units | (4,818 | ) | (2,755 | ) | ||||
| Payments on finance lease obligations | (143 | ) | (217 | ) | ||||
| Cash received on repayment of note receivable | 2,100 | — | ||||||
| Repurchase of common stock | — | (16,448 | ) | |||||
| Principal payments of long-term debt | (45,000 | ) | (81,500 | ) | ||||
| Deferred financing costs | — | (2,694 | ) | |||||
| Net cash used in financing activities | (43,569 | ) | (98,579 | ) | ||||
| Cash and cash equivalents | ||||||||
| Net increase in cash | 120,841 | 1,387 | ||||||
| Effect of exchange rate on cash | 125 | (87 | ) | |||||
| Cash at beginning of period | 87,715 | 67,494 | ||||||
| Cash and cash equivalents at end of period | $ | 208,681 | $ | 68,794 | ||||
Reconciliation of EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA are non-GAAP financial measures commonly used in our industry and should not be construed as alternatives to net income as an indicator of operating performance or as alternatives to cash flow provided by operating activities as a measure of liquidity (each as determined in accordance with GAAP). Simply Good Foods defines EBITDA as net income or loss before interest income, interest expense, income tax expense, depreciation and amortization, and Adjusted EBITDA as further adjusted to exclude the following items: stock-based compensation expense, executive transition costs, business transaction costs, term loan transaction fees, and other non-core expenses. The Company believes that EBITDA and Adjusted EBITDA, when used in conjunction with net income, are useful to provide additional information to investors. Management of the Company uses EBITDA and Adjusted EBITDA to supplement net income because these measures reflect operating results of the on-going operations, eliminate items that are not directly attributable to the Company’s underlying operating performance, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to the key metrics the Company’s management uses in its financial and operational decision making. The Company also believes that EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industry. EBITDA and Adjusted EBITDA may not be comparable to other similarly titled captions of other companies due to differences in the non-GAAP calculation.
The following unaudited table provides a reconciliation of EBITDA and Adjusted EBITDA to its most directly comparable GAAP measure, which is net income, for the thirty-nine weeks ended May 25, 2024 and May 27, 2023:
| (In thousands) | Thirteen Weeks Ended | Thirty-Nine Weeks Ended | ||||||||||||||
| May 25, 2024 | May 27, 2023 | May 25, 2024 | May 27, 2023 | |||||||||||||
| Net income | $ | 41,334 | $ | 35,431 | $ | 110,018 | $ | 96,933 | ||||||||
| Interest income | (881 | ) | (407 | ) | (2,895 | ) | (660 | ) | ||||||||
| Interest expense | 5,028 | 7,649 | 16,658 | 23,201 | ||||||||||||
| Income tax expense | 13,383 | 11,716 | 35,195 | 29,810 | ||||||||||||
| Depreciation and amortization | 5,079 | 5,140 | 15,871 | 15,044 | ||||||||||||
| EBITDA | 63,943 | 59,529 | 174,847 | 164,328 | ||||||||||||
| Stock-based compensation expense | 4,473 | 4,124 | 13,209 | 10,456 | ||||||||||||
| Executive transition costs | 355 | 737 | 721 | 1,158 | ||||||||||||
| Business transaction costs | 2,703 | — | 2,703 | — | ||||||||||||
| Term loan transaction fees | — | 2,423 | — | 2,423 | ||||||||||||
| Other (1) | 400 | (178 | ) | 199 | (64 | ) | ||||||||||
| Adjusted EBITDA | $ | 71,874 | $ | 66,635 | $ | 191,679 | $ | 178,301 | ||||||||
| (1) Other items consist principally of exchange impact of foreign currency transactions and other expenses. | ||||||||||||||||
Reconciliation of Adjusted Diluted Earnings Per Share
Adjusted Diluted Earnings per Share. Adjusted Diluted Earnings per Share is a non-GAAP financial measure commonly used in our industry and should not be construed as an alternative to diluted earnings per share as an indicator of operating performance. Simply Good Foods defines Adjusted Diluted Earnings Per Share as diluted earnings per share before depreciation and amortization, stock-based compensation expense, executive transition costs, business transaction costs, and term loan transaction fees, and other non-core expenses on a theoretical tax effected basis of such adjustments. The tax effect of such adjustments to Adjusted Diluted Earnings Per Share is calculated by applying an overall assumed statutory tax rate to each gross adjustment as shown in the reconciliation to Adjusted EBITDA, as previously defined. The assumed statutory tax rate reflects a normalized effective tax rate estimated based on assumptions regarding the Company's statutory and effective tax rate for each respective reporting period, including the current and deferred tax effects of each adjustment, and is adjusted for the effects of tax reform, if any. The Company consistently applies the overall assumed statutory tax rate to periods throughout each fiscal year and reassesses the overall assumed statutory rate on annual basis. The Company believes that the inclusion of these supplementary adjustments in presenting Adjusted Diluted Earnings per Share, when used in conjunction with diluted earnings per share, are appropriate to provide additional information to investors, reflects more accurately operating results of the on-going operations, enhances the overall understanding of past financial performance and future prospects and allows for greater transparency with respect to the key metrics the Company uses in its financial and operational decision making. The Company also believes that Adjusted Diluted Earnings per Share is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industry. Adjusted Diluted Earnings per Share may not be comparable to other similarly titled captions of other companies due to differences in the non-GAAP calculation.
The following unaudited tables below provide a reconciliation of Adjusted Diluted Earnings Per Share to its most directly comparable GAAP measure, which is diluted earnings per share, for the thirty-nine weeks ended May 25, 2024 and May 27, 2023:
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||
| May 25, 2024 | May 27, 2023 | May 25, 2024 | May 27, 2023 | |||||||||||||
| Diluted earnings per share | $ | 0.41 | $ | 0.35 | $ | 1.09 | $ | 0.96 | ||||||||
| Depreciation and amortization | 0.05 | 0.05 | 0.16 | 0.15 | ||||||||||||
| Stock-based compensation expense | 0.04 | 0.04 | 0.13 | 0.10 | ||||||||||||
| Executive transition costs | — | 0.01 | 0.01 | 0.01 | ||||||||||||
| Business transaction costs | 0.03 | — | 0.03 | — | ||||||||||||
| Term loan transaction fees | — | 0.02 | — | 0.02 | ||||||||||||
| Tax effects of adjustments (1) | (0.03 | ) | (0.03 | ) | (0.08 | ) | (0.07 | ) | ||||||||
| Rounding (5) | — | — | (0.01 | ) | 0.01 | |||||||||||
| Adjusted diluted earnings per share | $ | 0.50 | $ | 0.44 | $ | 1.33 | $ | 1.18 | ||||||||
| (1) Other items consist principally of exchange impact of foreign currency transactions and other expenses. | ||||||||||||||||
| (5) Adjusted Diluted Earnings Per Share amounts are computed independently for each quarter. Therefore, the sum of the quarterly Adjusted Diluted Earnings Per Share amounts may not equal the year to date Adjusted Diluted Earnings Per Share amounts due to rounding. | ||||||||||||||||
FAQ
What were Simply Good Foods' net sales for Q3 2024?
What was Simply Good Foods' net income for Q3 2024?
What is the EPS for Simply Good Foods in Q3 2024?
How much did Simply Good Foods' adjusted EBITDA increase in Q3 2024?
What is the outlook for Simply Good Foods' net sales for the full fiscal year 2024?
What is the expected contribution of OWYN to Simply Good Foods' net sales in fiscal 2024?
How did Simply Good Foods' gross margin change in Q3 2024?
What was Simply Good Foods' adjusted diluted EPS in Q3 2024?
What were the financial impacts of Simply Good Foods' acquisition of OWYN?
What caused the decline in Simply Good Foods' international net sales in Q3 2024?
