SMPL - Earnings call transcript Q1 2018 | The Simply Good Foods Company

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Operator

Greetings and welcome to The Simply Good Foods Company First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only-mode. A Question-and-Answer Session will follow the formal presentation. [Operator Instructions].

As a reminder this conference is being recorded. to conference like host, to now Ms. would turn over the your I ICR. Perkins, Rachel with you you, Thank begin. may

Rachel Perkins

quarter call morning. Good I the earnings Simply am you XX, first for welcome to pleased The Foods Good ended XXXX. November to Company’s

morning available on earnings under call be website of Chief and are Investors morning AM approximately press and Chief the release on Cunfer, section call Scalzo, The Officer. Eastern Officer; Joe copy X:XX Company’s this release this me presentation will available and archive the the President at days. are Time. is of accompanying of Joining also Company an XX remarks Todd Financial today’s being this the This for and Executive www.thesimplygoodfoodscompany.com. webcast live issued A website its at

of update statements During found that and risks management such materially. The in no call, to SEC listing can detailed forward-looking release the filing. Company results differ today’s risks will Company’s subsequent uncertainties subject are of and statements and be to these today’s uncertainties undertakes the based to course on that events. various A may press actual cause make obligation

on weeks and entities, in XX, and management today’s information impact the basis, financial our provide and XX information The are as And directly Predecessor and Business statements In Combination on GAAP that we forma operating provides forma pro has references ended make pro the release to management unaudited included been adjusted All financial the XXXX, comparable assumptions XX to weeks applicable. earnings upon release are with reflect, today forma of the of on The financial historical adjustments to XXXX. for Today’s as the order measures. believes have be financial of performance. reasonable the now forma addition, finally, President XX, that financial Successor a results for most Joe the in call measure November information believes the Business based financial value reconciliation it investors our pro presentation, November related EBITDA, forma available the as information of With XXXX. transactions of turn will useful discussed pro on Company’s Company and XXXX earnings and basis. unaudited to with Chief to to pleasure a non-GAAP the ended of it's which the beginning a that, non-GAAP information fiscal will Scalzo, includes measures Executive Officer. over my completed measures Combination financial transactions fiscal pro

Joseph Scalzo

summary to and you, the We an our year joining pleased and quarter recap of off on results. our and are discuss with Rachel. thank first provide us. will first update After Today, well call Thank morning Good started the a initiatives. Then highlights questions. open Todd for that, will quarter growth you quarter our our we’ll everyone financial first fiscal financial results. I

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audience. a of point-of-sale may growth in nutritional snack. our growth to penetrated US we in X.X% under result of snacking target is core consumer households, You snacking the continued of strategic XX% is efforts believe broader generated US leaving still nutritious US of We recall a about and category plenty what for business relatively of marketing room as future

about talk strategic in this a our POS an Importantly, acceleration I initiatives. we fiscal total reported from expected, growth growth of X.X%. represents our year POS moment as XXXX will

support expand advertising in growth as represents marketing on our quarter marketing and strong we X% up investment to during behind key compelling based that these new merchandising retailers note support Atkins will opportunity by believe target. our initiatives, new We our the campaign. investment consumer stepped address I our a Xx to However, confidence we synergistically in and a

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a sugars. lifestyle. just features visitors, both video Our website had from XXXX on It content he the programmatic in a thoughts Rob as on self-directed well information shares for complete million offers and XX Lowe his also great overhaul where which hidden low-carbers as new Atkins received including living

expansion. third on innovation strategy portfolio and Our focusses growth product

clean We yield and to. Atkins rolled to cleaner out. recognizable Today and to means labels consumer seven our for profile XX demand bars delivering carbs consumers ingredients still net high respond continue which case to that are labels consumers the the fewer accustomed to been fewer while converted of have and ingredients

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our shake. before meal bar and our and see you leading of Here the leading after

area fourth space [ph] steady been is white for focus has of growth Our growth e-commerce us. opportunities. showing in a expanding

continuing increased the gross XXXX. sales fiscal trajectory quarter, growth year e-commerce First in from our year-over-year, XX%

you XXXX, As to we to offerings. stepped new e-commerce in product up digital investments drive development of traffic customize including media know, top many and funnel tight of

grow believe pleased our I'd range, call designed to Atkin's exciting to remains initiatives execution year X% initiatives that XXXX, this approximately over turn e-commerce far. and so we we're XX% the accelerate fiscal sales. as like For opportunity. to overview, Overtime, With the strategic are today this discussed represented to growth, our of we Todd. an with help to These gross an

Todd Cunfer

Thank you, Joe and good morning everyone.

the me to with points relates follow. numbers, on Let see the as pages that you it start two

on information the November this all basis. the new our XX, forma as fair First value the interest XXXX, comparative Business of and for ended amortization business expense presents for discussed and purposes, for the Combination we be review including XXXX discussion assets financial quarter unaudited the occurred of statements We XXXX which ended a measures XX, if after quarter on August provides on the had the of XX, expense period believe today financial structure. the as forma helpful results pro this capital statements will on November based will performance and financial during purchase based pro

asset Second, we flow model. basis, on strong an our evaluate like also adjusted on our based cash EBITDA performance

performance to income of to true adjusted We have key this of included net press included today's in indicator reconciliation a underlying detailed believe business. release. a from the is GAAP measure EBITDA the We

X.X% sales and driven The million, first in of Simply X.X% the core as X%, quarter were quarter. results acquisition growth Net up contributed of which follows. were $XXX.X by to the Protein

due growth core the we Gross for in by points by quarter characteristics. recall, increased XX.X% of our rate. $XX.X to improvement, lower XX.X% $XX.X spend the was with company primarily X% a prior driven X.X% company on $XX.X increase The up offset You'll increase product XX.X% very flow million year from increased higher X.X% million EBITDA income to continues a addition million in profit up takeaway up to and X.X% costs. Wellness as to from mix cost full and gross attractive input public million to gross driven of was the company. partially our profit Net by Foods $XX.X our to public period. Adjusted benefit ahead as XX basis margin consumer cash and G&A first in embark the margin favorable

generation. business estimate strong quarter flow of cash like the XXXX investment year driven of asset full an our have in website by approximately CapEx approximately digital million. application. We for were with first media million, expenditures $X.X We and Capital $X.X new model

the Moving on balance to sheet.

term with million outstanding and $XXX had pro million outstanding ratio has credit of cash available $XX As XX, forma line debt-to-adjusted a XX, company November million as its The in November of the net company resulting times. XXXX. borrowings of loan X.X $XX.X revolving no of also a EBITDA XXXX, of

rate the all The old of term new LIBOR reminder, result loan $XXX the Conyers interest with former a on million the to a a basis was was favorable and of XXX has paid debt Park issued. with merger points. plus new as off July loan As Xth, a term debt current terms

I of on reform I the would call initial Joe, back turn briefly it. like Before legislation corporate and to tax to recent view touch the our

thorough rate with While estimate pro to XX% evaluation of effective our and to forma auditors, XX% our based we review we for XXXX. on our know effective a approximately tax potential today, benefit what tax compared the blended rate XXXX we fiscal be continue tax XX.X% fiscal to

of As fiscal our year August we based year new fiscal our XXXX the reminder, under on a two-thirds tax law. end, only corporate have

for corporate That fiscal Joe expect as like I overview. the tax full benefit the to XX% rate. turn realize call effective financial a XXXX, to tax remarks. now estimated XX% my result, brief For we the reform. we would And back to to closing concludes of

Joseph Scalzo

we business as our summary, execute move opportunity confident as strategic our In against well forward, Todd. four to in Thanks, initiatives. we ability the remain for as growth growth

we snacking pleased of and our XXXX with start our we the are to deliver XXth point-of-sale believe well fiscal US. the to straight positioned growth are in We

previous including algorithm sales, now deliver of of are We questions. to a rate Simply fiscal I an $X expenses. that expect slightly with EBITDA and Good our sales to your higher everyone’s that, Operator? in stated growth million incremental consistent Todd interest And and adjusted with public XXXX company than Company. take net at The available long-term appreciate We net Foods

Operator

Instructions]. [Operator

Rob Please of proceed line Our Deutsche with with comes your first question the question. Bank. Dickerson from

Rob Dickerson

marketing more is increase QX the How’s campaign normalize is seems for housekeeping or Lowe progresses, we that spend January pretty given just year-over-year, -- let’s was rate now come just further should couple Rob on more in that items bump and decently. then now or of year quarterly a further top-line I as potentially expect the hopefully with and to -- say to launched that? ad in launched the going? A as X% is we goes that kind that of guess in and terms of

Todd Cunfer

now our right full in estimate X% is of that well. the we year increase what in hit our current -- that’s Yes, P&L as the not was only QX, the

Rob Dickerson

more reform And it for of kind just kind dive going then be of the perfect. hate Okay, into but material tax issue impact I obviously forward. to broadly a or you tax to seems

half just Just what said would ’XX would than a in then kind back be Todd XX%. that is like you be seems of would blended, you’re its all ’XX for ‘XX in bit more maybe half -- it first be ’XX. XX%, said the the you better of in blended of XX% upfront ‘XX little XX%, like but what looking of and But

would pretty so and numbers process as to So around just any provide just to sounds level confidence what get the is you’ve to to the done it color be? those like trying can numbers those you high far get of

Todd Cunfer

you’re correct. so Yeah,

in So, correct get we so if quarter blended goes was the what down in full P&L XX% rate go to the you’re to first rate that you for year, as a will you tax see XX% year on. saw the the XX%, close

have third rate the under and So, come our tax old second for then tax the fiscal anticipate the for year that one-month example full QX the in new of thirds two get get as QX, December benefit under to the we you’ll of tax so half into rate through. a rate, we we

those as liabilities, in the revalued we see QX deep well someone-timers and dive our The other likely come we new taking laws will you’ll deferred assets get tax finalize there piece P&L and be corporate as will Rob TRA under through into out tax our our a the and is financials QX.

Rob Dickerson

can then different think number and cap how larger just you potentially what’s thought tax from more or the on any you market terms to to potentially tax do question, landscape maybe you broadly M&A companies a and are last US bit, valuations internally could of to assets acquisition internally process forward back the now a others conversation and just expectation has given there happened it Okay, in now? just M&A you believe that within for side occurred. going or might reform some pipeline of taking food shift about as come the provide Is the

Joseph Scalzo

this Rob Yeah, Joe. is

You deals has few seen of in months, all up. seemingly know the have activity the last as first the in that you’ve picked been announced

cap will that realign for think is there tax to tax certainty of their for those their if that portfolios, was certainly about certainties now some of So, around issues thinking options we’re I are. what one certainly that. think larger the that provides has been looking way more would that uncertain And that I

going M&A can’t recently we’ve imagine to I So, slowdown. the activities most that seen is that

Operator

Thank you. [Operator Instructions].

Jason Our next line proceed question. Sachs. question your English the from with comes Goldman Please with

Jason English

two With I that’s little the will are seeing understand to X%, to market in range. showing off bit around the you’re in channel data to take online elsewhere wanted IRR pointed the better, going add a of X.X. there that retail I consumptions the brick-and-mortar, we’re suggesting that consumption you X.X% sales, overall XX% consistent should X% the think that at with see Is all or what points data? the in offsets tracking growth

Todd Cunfer

you’re looking business correctly. that’s at we mean we declined think I also I slightly. have international an obviously it have,

quarters, an business new we built for is our the offset two So, in first nature, works get that a ready promotional inventory the bit things there of there. we as resolution, activity. The of way little we year's actually

in I were quarter you first that. really is the strong is it quarter. think the we're strong you're pleased correct, takeaway e-commerce and thinking little are very and the well, obviously what first less the about inventory So, numbers a as of in way build seeing But about

Joseph Scalzo

on Yeah, I build can that.

was I there of delayed a was around seasonal inventory season kind a years. of timing lag, think the little the trade that happens bit to prior relative the build merchandising

would quarter, expect we So, the kind of overtime. second out itself in balance that

Jason English

the into so flow through enough Have you quarter? see far second

Joseph Scalzo

hard, total so of at kind to careful A it thing yes. quarter the little you It's want look yes bit, basis. week-to-week on on to

POS January is same lot to of of keep February, pretty can in you inventory has to to of, the there have weeks and the as be a has retailers imagine, considerable. just grows as So, amount inventory

So, by week-to-week. shipments when vary those can happened customer

would we right go expect of kind quarter. as that second through to so, we And itself the

Jason English

news and Got plan, the development Can on enablers marketing the the U.S. in to plans exciting in a the the business Protein particularly U.S. it. Simply work And your endorsement Rob the Club launch against updates here. with give growth us and the of other the Lowe you restage the launch couple

Joseph Scalzo

Sams a continue door on we really with the Costco, take have to business on BJs good at Yeah we to that's some continue and going knock & to Club, time.

still [indiscernible] your some Interesting, there but the progress Costco we no I with every actually have was seen in question And have We are think second in may you book around is shared States, last Protein. slow. Simply yet. products but we Club United

progress we'll as launch as go know products, the complete moving continue the soon we're you a we're ready, when as chain, the work that continues, and supply go, guys work we'll pricing, packaging is. We the that as our like validation Protein the ready in for we consumer, into with Simply pleased standpoint, to feel to let well from in U.S. products we're

Jason English

expecting reinvested to pass benefit pressure, of of how you you get of the likely Perfect. versus it to to remain And in words, it's are on. be in do competitive? much think on I'm trying What second competitive much the retail to last to to think you retain question other what is rate. do have thoughts how the going me lower tax for you in implications I'm derivative your the landscape I'll then curious sort are

Todd Cunfer

to lot a just money reading of people whether guessing think a back of those some not. and that Yeah, there, I'm outcomes of reinvest of obviously great question through it's analysis out started some will we or

be something on it's yesterday Joe and talking I were as matter a just to going So, about we're fact. it, of have nimble to actually

right algorithm. if we'll adjust obviously plans changed necessary. the to and But need no now we So, competitive, be has

Joseph Scalzo

Yes, it's interesting.

I think And our effect we that feel is have we're marketplace. like level we marketing evaluating always we support marketing the of of the in in the the business appropriate. level, that like

forces of invest now, kind of those of the as things our good if feel support So, we appropriate the like evaluate the is marketing we have what to go to external give I Right us kind would don’t return level tax we forward. I consider change that we view new a always of a and and opportunity, relative regardless in those the law. in are, business major anticipate

Operator

Mr. there this you. the final Thank Scalzo, for questions. time, turn will further comments. at to no any back I you are floor

Joseph Scalzo

very you Thank your you Good for you joining Thank operator. Thank a our in hope Simply have good Company. call. much, We Foods appreciate We you. day. The interest

Operator

Thank teleconference. you. today's This concludes

this lines disconnect Thank You for may your at you participation. time. your

The Simply Good Foods Company (SMPL) 9 Jan 182018 Q1 Earnings call transcript