SMPL - Earnings call transcript Q1 2021 | The Simply Good Foods Company

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Operator

Greetings and welcome to The Simply Good Foods Company Fiscal First Quarter 2021 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. I would now like to turn the conference over to your host, Mr. of for President Foods Simply Vice Company. Pogharian, Investor The Relations Good Mark you. Thank

You may begin.

Mark Pogharian

earnings Good by am its Cunfer, overview call the will morning. press this you Q&A made be operator. accompanying Executive with XXXX. you, today’s Thank session. website I an and President issued a Officer This Simply quarter is November be Eastern. Investors Chief of Foods company approximately then available. at at will copy presentation the call Joe first you of a.m. remarks Scalzo, company’s to and pleased being which Good Company Financial release release will the of X:XX earnings of under Todd The morning results, the for the webcast Officer ended followed also section www.thesimplygoodfoodscompany.com. XX, archive are and Chief The A welcome available to and provide an

to with for refer be accordance financial a today’s call GAAP. Executive Officer. of detailed I information risks now the can found the certain GAAP. With non-GAAP and presentation with today’s we of events. that be During prepared to comparable useful believe the substitute today’s is to as accordance Scalzo, reconciliation release make the actual considered differ presented to provide course measures of undertakes will most the and that materially. or intended listing this Note Chief on the company’s may for press Please will uncertainties in release update turn press and information non-GAAP statements Joe investors. that The isolation filings. refer to subsequent in SEC risks on no that, will results A based uncertainties we The of financial various are information cause to such to these company call, will President in that statements forward-looking to over and not obligation measures financial for today’s call, a management in subject measures

Joe Scalzo

will thank will Todd Today, of joining you detail questions. quarter us. it you, a a Good discussion up details our will performance the results in your and Simply morning Thank our bit Foods’ opening Mark. recap you to first Then on and the provide more with Good for financial some and brands. the results wrap discuss of outlook before we call with I

food results, well-positioned confident advantages Simply business let Before the leader I to remind are unique is nutrition our me you XX% most snacking a quarter while long-term attractive that snack at – to significantly over of well we the sustainable drive grown discuss in last under are U.S. X we why still the of of category Foods growth. first penetrated household And compared plus category. households. U.S. years, briefly the and penetration Good is it nutritional has about the categories

new loyal the consumer go long-term We two grow and time. large have benefit of and we the Quest consumers meaningful scale among snacking, benefits brands mega over targets. broad convenience appeal have with wellness, marketing capabilities from demonstrated Furthermore, Atkins and trends different health compelling, nutrition. in consumer and on consumer two to We

has which operate demand a an We channels, We provides consumer across pre-pandemic growth reduced in And well our business despite is flexible to participate growth, volatile the has resilient have temporarily and in mobility to to levels. while generates consumption on-the-go marketplace. enabling still asset-light and our cash free M&A. even strong to fund also business fewer below pandemic resumed during the retail customers proven win consumption a diversified products, marketplace that due multiple us occasions, business in though and organic quickly us flow pathways model

mobility consumer mega as and that brands confident are I ability benefits to trends we long-term the also underlying brands, attract our these growth employees, mentioned our our driven improves, committed rate the of the will do new to thing consumer by our of reasons, times. consumers earlier improve, the these and challenging business brands. and our our for right our For the customers our We consumers to remain operating during for

Lastly, I growth as estimates. quarter the year start as and by our am takeaway first encouraged earnings exceeded sales retail well the all to as

e-commerce greater a certain full strong steadily versus increased growth, to Good first our in of shipments our retailers. and Moving expectations, takeaway that increased sales net exceeded quarter cost due primarily to by controls. unmeasured the quarter X, improved for EBITDA to mid our related sales retail primarily and QX Adjusted the inventory in expectations XX.X%, move first Simply than quarter Total and and the increase build of single-digits quarter. the Foods’ retail anticipated we Slide measured channels by through driven Quest, the as timing exceeded takeaway plan strong seasonal

remain the snackier of portfolio, confections, mostly chips are channels cookies bars brands driven while by was portion measured in for to performance due Our occasions. our pressured on-the-go home, both and consumed that primarily at fewer

share gained low category, which declined market we versus single-digits. the Importantly, overall

remained year pandemic. Our estimates. by to was snacking period encouraging. reduced products gains strong last start shopper commitment the performance off-take The major since improved items is in retailers consumer new new the the versus a Early of the than these distribution our channel quarter, of on due with but mass and category still line in the trips it’s nutritional ago our lower bit to

late improving month of flattish due improvement mobility July As we consumer April our takeaway retail September, the was mid weaker growth channel a season. discussed as trough In the retail back-to-school quarter, first sequentially stalled. last our measured quarter, fiscal first in to versus takeaway plateaued after to

first Atkins’ fiscal our November, our improving However, second the Good and all in improve. takeaway Foods’ retail trends well October outpaced marketplace driven Simply the snacking In Quest across trends, steadily the shake in by at-home QX month last December, of of more and as quarter, to snackier Total launch portion primarily portfolio sequentially performance improved. as our year’s of nutritional the category category continued timeframes shakes. our

first quarter, net Turning driven XX.X% acquisition. Quest by the to increased the sales

momentum confections marketplace with season. retail due the management quarter, these category. during year to September, Similar especially acquisition profit was throughout XX.X% retail were given the off were lower million products Specifically, sales The shakes on Atkins’ X.X% driven plus of Quest the category. metrics to increased details occasions QX by and Atkins’ Quest, divestiture at on-the-go period. X.X%, versus cost form and EBITDA greater and bit. back-to-school Quest $XX.X the to weight MULO but gross outpaced Tom in provide continued a Atkins will SimplyProtein about by start bars consumed pressured as legacy our soft last just million. takeaway, higher quarter takeaway the flat company quarter, in than measured increased inclusion in are this a improving to weaker these channel improved primarily IRI business adjusted increase direct We was control store sales X.X% our the C sequentially synergies. $XX.X to of the contribution for a was trends growth. expected a X.X% was Atkins’ November, up encouraged Atkins’ home. result shakes ago due net takeaway Atkins the usage in partially retail of across net is The total headwind.

in this gains channel, and to the XX% be are via driver new products, should X be with consumers growth. performance While up now shakes iced representing new shakes e-commerce strength, consumption growth perform coffee a about pleased still double-digits. recently with particularly to well up from early, consumption dessert E-commerce bars. is of launched of we distribution XX% a QX Atkins E-commerce and sales. up of X% our our And protein just adult’s continues continue one-third continued sales, ago and to in years to with

growth and initiatives quarter. it positive responsive we positive in the are brands to pandemic encouraging resumed buyer see quarter Our since the first to began. the that trend growth of this new pleased was as It are was marketing

was occasions. lower As expected, year, overall last buy rate on-the-go usage versus reflecting down

equaled expect we improving gains new e-commerce continued product from new strong least As growth, seasonal year into year we at to consumption move and that merchandising QX, distribution ago.

in given the surge consumers U.S. participation, remain cases Although recent seasonal cautious throughout we about the COVID-XX

The QX. turn about as gains bars now calendar cookies represents was in takeaway and well the up products food, performance headwind IRI me majority club gains QX confections by growing shake driven XXXX and confections chips, extremely mass launch the remained make of products. Quest and Similar where plus Quest the as well low XX%. these year bar slight quarter, driven ago the increased XX.X% the our Retailer in Quest remainder in business segment, MULO better than consumer occurred universe cookies, and store declined demand as to we by performed channels. X% the through Quest double-digits. QX chips QX in across takeaway our last of major of and snacks, Quest on C to off which and XX% and Let retail is measured of with in was way distribution the new and distribution for retail trends strong improving a year. shakes

on-the-go As impacted bars mentioned previously, consumption by occasions. lower have been

continues stated business I well XX%. to with As up earlier, takeaway e-commerce do retail Quest

bars, chips with rates with to for business continues Amazon excel Our similar growth cookies. and

it that seasonal retail will continue will New to the takeaway a be category. remain into Chips, and E-commerce benefit, solid move anticipate year. As be strong. outpace confection than merchandise we will cookies greater be and last QX, will will distribution gains and we Year

surge similar given However, about participation seasonal the in we recent cautious to Atkins, COVID-XX remain consumer cases.

to year to than summary, seasonal and operating timing related strong shake takeaway shipments the retail fiscal with driven start comparisons COVID-XX partially Quest Additionally, better-than-expected We launch. strong XX.X%, certain by the build expectations due pleased primarily XXXX retailers. challenges period of environment. are ago retail of we despite estimates, by our better inventory year’s In are to in up was the e-commerce our takeaway ongoing exceeded last the in that growth, the the

term trends outpace challenging cases by increase in the given are confident and COVID-XX improving category the our could we will the be We the in U.S. across although encouraged marketplace near it

We investment, the sales against as our we and with be earnings drive our flexible to during consumers approach will continue to in strategies, execute year. brand and drive fiscal to engage to growth

financial greater the some provide details. I to to call will turn you Now, Todd over

Todd Cunfer

Joe everyone. Thank good you, and morning

points on with me they that you to see the the relate Let follow. slides two start numbers as

XX will statements XX, XX the First, the for XX, XXXX versus November weeks XXXX. for comparative ended we purposes, financial weeks ended November review

an Second, given EBITDA as performance business business we on our asset-light strong basis adjusted it diluted model, cash evaluate earnings relates share. per and flow to our

will I GAAP a these adjusted true adjusted Simply with of believe review acquisition. press We net a Good performance to the driven included of the are sales reconciliation We business. historical the have measures release. indicator Foods’ XX.X% Total detailed begin from today’s sales. by in items key a our increased Quest net of underlying

sales net only million, Good to growth. quarter for Simply Quest in XX.X% increased QX Recall, of business the total $XX.X XXXX. contribution a to net Specifically, $XX.X fiscal days we Foods XX sales million first owned

quarter Atkins’ performance, Australia solid international channels. increase by and the by timing growth driven of certain was contributed items, gains to percentage velocities X.X% by estimate company increased softness These total X retailers. increasing majority of sales the Atkins’ these the seasonal growth growth. in to and measured gains related in build to So, shipments the by offset X.X% net this each the by is factors X contribution e-commerce that existing driven in acquisition. and of driven distribution inventory a to points were innovation, about partially strong We

Atkins’ mentioned, a Joe divestiture IRI X.X%. was The off SimplyProtein As in retail X.X% quarter first takeaway the of measured on headwind. channel September XX was

divestiture the XXXX the of headwind a growth. stated, from is both sales first SimplyProtein half full the Europe net year previously As to about and and exit X% fiscal

other $XX.X impact of by marketing million profit Recall, in offset increase across quarter review of XXXX. Quest. metrics. was million, Adjusted major the by Quest due partially to business EBITDA to XX.X% was to affected XX.X% $XX.X Gross the last first for a XXX the a $X.X primarily in increase mix. year. headwind was The purchase the $XX related of in decline Quest XX increased in in and points fiscal was profit basis acquisition. of to step-up full million versus inventory by XXXX, point expenses a quarter the an Now, last in year Gross unfavorable Quest fiscal XX.X% due driven the profit lower a XX.X% quarter margin first non-cash of increase versus the increase million or selling profit accounting the adjustment purchase first was year non-cash by basis prior the driven accounting step-up a results acquisition. primarily Gross gross margin the inventory of quarter inclusion gross of and

increase year, continues and full administrative a in the of result Quest organic that to expenses anticipate the as expenses of stock-based company at growth. million. with For General compensation the increased and restructuring $X.X sales marketing least line and will $X.X costs, integration totaling million inclusion

items due full $X.X million quarter million other the increased to debt. $X.X to to in Moving related a interest P&L, of primarily Quest acquisition expense

effective rate the in XX.X%. Our tax quarter was first

loss QX result, year a of in was a As $X.X million the net ago million in income period. $XX.X versus

inclusion $X.X higher Impacting a a the EPS of last diluted million, integration first million. as reported and of per includes income mentioned, which period. expenses Quest, year the Meanwhile, EPS, of $X.XX EBITDA reported to $X.XX, an less compensation Please explanation expense and interest and press reconciliation $X.X $X.X excludes due share amortization million Turning Note adjusted year income, diluted. of compared adjusted with share measures. an of financial to diluted was to and ago restructuring of quarter release per EPS depreciation of million versus cost stock-based for taxes. interest calculated $X.X was versus $X.XX adjusted loss $X.XX EPS, the just of diluted refer that EPS today’s non-GAAP expense items we increase

outstanding the loan, and was first $XX million. combined November about principal company from flow the down sheet the the $XXX.X cash the balance of $XX XXXX, Moving balance at quarter cash ‘XX, of operations to million. and the of fiscal in the its quarter, sale end first In million term from flow and of paid SimplyProtein, was proceeds

XX, QX. expenditures had in $XX.X the Capital X.Xx. ratio net million nominal November adjusted the EBITDA of debt XXXX, XX-month As cash of to company and was were trailing

of $X we in still However, warehouse. million driven XXXX million primarily new to CapEx equipment our expect by $X fiscal for

remains unchanged $XX year million. would Joe Our remarks. I back this expense call now for to turn outlook like to interest at closing approximately the for

Joe Scalzo

Todd. you, Thank

we increases, mobility rate improve. consumer business growth expect As to the of our

have We trends on-the-go wellness and portfolio mega consumer at health brands of aligned nutrition. and convenience a both with

while carb high low and to continue are snacking making that consumers Additionally, decisions. sugar express protein, attributes minimal important

such, good As we long-term feel business prospects. our about

by and is Our the to at on which given quarter, deployed home. are month in growth consumer performing improved and business more is month to normal vaccines of confections, first chips the consumed return U.S. well more in the behavior the horizon cookies, driven that often being shopping A multiple are now the

in will time, of balance usage However, difficult pressure mass to to the point trips in of the when occasions the and at channel predict reduced consumer continue mobility could this Therefore, it’s occur. fiscal this duration bar the through year. unknown

provide at As XXXX full outlook result, to remains a it year difficult this fiscal time.

than better the updated half for our results, quarter have of Given expected first the we fiscal first our year. outlook

million adjusted a EBITDA sales headwind earlier. to includes $XX now of mentioned X% $XXX related Europe million Assuming sales SimplyProtein to This movement and the the remain net to million divestiture net $XXX of U.S. current that consumer we million. exit Todd levels, $XX restrictions to at growth anticipate and

our Additionally, will that expectation same year adjusted we full EBITDA about gross margin last be year reaffirm the and should as increase. margin

an flexibility. provides advantaged have that flow financial from enables strong with variable model that We us business operations cash asset-light

create long-term for your sustainable net interest and We earnings against and expect available well-positioned are for growth company everyone’s take questions. are shareholders. strategies in We appreciate are to value executing our now and that we our will our sales

Operator

question first question. of you. with Please Holland line proceed Brian [Operator Thank Davidson. Our your from comes D.A. the Instructions] with

Brian Holland

about of and quarter to wanted on ask morning congrats I couple here. Question business. questions the a thanks. Yes, the strong Good

were of acquired that it, continue kind that think business Clearly you of as were the catalyst. adjacencies of expandability these the surprised I you and the of appears kind performance be a to some to out. rolled

is of well? expanding etcetera, see doing know category the to bars seem we frozen a some the you quite As chips, perform, of as of focus the under how a much and be quickly Quest for as that adjacencies how into cookies products, the sort

Joe Scalzo

It’s morning, a Yes, question. good Brian. good

States all, question Quest bar and expectations protein the we around metric the we high that I exceeded to the think relatively first business has familiar over brands. Quest the business, stay it awareness last the of And is year. households growing. you point the balance still that unlike the asking are are the focused to between starts other our expectations in with Quest and for I and when it Quest is, The is all business about bought I on ensuring most United low the overall of business we continues the bar important had And business are the the it’s forms. part, recover Atkins most at would not think brand

brand So, and brand to better the through important that most is do the bar awareness continue is job is part known. business, a to avenue business. standpoint of from the the build brand which The largest, get protein to easiest the

expect to that. So you forms, is now, you That at-home would right the us – brand. focus especially when component important to consumption is an alternative to more should on said, continue important,

now business the at-home. cookies on confections then on awareness in chips, and that helps us the focusing drive brand, and consumption So, brand build the introduce the

those two the in as as growth think see I things, the believe that continue is balance us So, forms. well should form you bar because to alternative between there upside we

Brian Holland

starting any there or take get and backup year Atkins? How as flowing gross could out of one product the margins changes we Understood. asset opportunities integration where you on legacy of to those business, cost this are the as Appreciate business that etcetera. follow-up remind base, comparable other the just then to in mix, the us and about – lower from just thinking that we synergies margin color. through there Quest And a far

Todd Cunfer

the closer business. this legacy getting Todd. margins bit improvement Atkins side Yes, are are is The to seeing are we definitely Quest on a they

So, we about gross a margin perspective. probably larger are X below points from

Some of the those benefits. starting from of of have the are logistic – synergies we a kicked some standpoint, some to see in

have in that We kick other projects a year. will perspective a number the from later in of supply chain

to legacy think that again, bit that progress business long-term, making a some just probably are gross in, to will definitely of forms the little it’s against some are in going those less continue it’s progress. I we some than the channels So, see be we always Atkins, but margins,

Brian Holland

I you, it Go of Best everyone. luck I will there. to sorry. leave Thank Todd. ahead, am

Joe Scalzo

In size the follow that of a both from the to profitable it given up brands, a it the is in to tends more the company standpoint. of business form be bar –

So, performance for enhancing is a time driving over opportunity bar margin company. the

Brian Holland

Best luck, it. of Thanks. everyone. Got

Joe Scalzo

Yes, thank you.

Operator

you. Thank

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

Jason English

morning, where on Year the Happy folks. improving momentum good quarter. just and congrats pickup I left you guess, Hey, New the on let’s throughout sales off margins.

out sequentially compression step guidance? so that question flip your Looking I the bit is in year is seasonality, XQ at going always of based prior of why to XQ to down year much but get on midpoint we are margin at XQ, a margin from base, a least given the year

Todd Cunfer

lowest the in to to – margin from on of relatively should potentially gross the be to Yes, and where EBITDA line product QX I we for intensive or quarter, similar. in QX be helped But us always be mix is a merchandising but I think and we don’t fairly talk channel depending a from as margins occurs margin this last because QX QX should going think with have of margin QX quarter we compression the bit we heavy year-over-year, QX in. should that comes little about a the are perspective lot

Jason English

or gross margin? to Are referring margin you EBITDA

Todd Cunfer

gross I am to referring margin.

Jason English

Okay.

back maybe P&L in value your up go and that my – SG&A guidance I check for stepped back implies math? need there to but guidance down check at and I and to out like margin needed of we the the happening to think or EBITDA maybe it’s midpoint year-on-year, would can be back go first see maybe my half math, is just XQ the I the your of obviously and something

Todd Cunfer

SG&A little projecting in what marketing the increase slight on Yes, the are we rate as a bit side.

marketing. So we of a up bump can little see in a bit

a bit up to higher new kick will We just FICA quarter little pay will in projects higher. the as increases. a We in some to well. G&A G&A as as have on here. have in see again which quarter tends so quarter second going some the year. bumps taxes percent there, always start It be increase to We of the the bit get QX always start a

gross no but similar. maybe margins a little changes. again, So EBITDA bit significant be should margin lower,

Jason English

has to Okay. shelf the your And update them, or changed? with behind you most share good how you us give you can an either of of visibility resets on believe shelf

Joe Scalzo

the had good on we to so – it’s both so basis. TDP season returns, right, brands you fall Jason, see have but gives consumption growing single good a part, low far, high visibility double-digits to we consumption, a to we early most Yes, percentage growth, TDPs a reset in the for had that

So, we pretty well. did

had Now, the are those productive how all – items to comes understand are have down consumption. how to really and you those items on impact incremental it

are – need to we that, understand as November, December we know, need consumption months. February, January, low better you March So,

for reads, read our more about want off-take that. before want most new to been don’t And data most positive early. pretty so too We bit but little see feel much a of products, has early good into to the you part, we

Jason English

I on. guys. it it. pass will stuff. you, Got Thank Good

Joe Scalzo

Yes. Thank you, Jason,

Operator

you. Thank

question with of with next Stifel. proceed from Chris Our question. the line Please comes Growe your

Chris Growe

nice I and just had a quarter there. question…. morning good Hi,

Joe Scalzo

Chris. Hi,

Chris Growe

you. Thank Hi.

of add I am that sort as define are big how product is have other you Just new the seeing couldn’t to of the growth, Quest? Jason’s it in also products had incremental on situation the you categories. your you wins, how contribution there a kind TDPs curious think the those competing some to follow-on products? to what pretty your from help new just you And to you and competitive good space you question about contributing perspective have those I for had new define maybe thank brands shelf if lineup, quantifying from there, Atkins nice with a that sales And or are and good a you

Joe Scalzo

talking ourselves still innings first, consumption a new items. about from Definitely, of early really

look week of good. velocities So, to kind week we just at it pretty off-take, to appears be

bar performing butter Atkins months. class the the pretty well, consumption indulge all both lemon typically the to again, cup, on ice December peanut shakes the November, on coffee off bars starts. and So, good are soft But dessert

read but But you start. too want environment, So, are coming we a don’t supporting retailers kind overall, much into like to the COVID think little that, bit theory. looks it feel of pretty will appears. brands, good I bigger of steal a It I about back and in Jason’s

like I category, our really pretty kind from and most don’t bar the bar well. has pretty Quest the pretty So done Premier in – at it recently set, clearly well, a Atkins peers done of looks standpoint. have haven’t done that looked has well,

to I – have space. order consumption this COVID invested the brands becomes environment. opinion more at looking little retailers leadership stronger to more a drive of in looks So, see a before maybe important of than data just obviously category in kind form like it want kind bit in than shelf that I

Chris Growe

that to versus help say of the that one for example at seeing relate brands, push behind of these the large your just to retailers that getting channel help retailer, relation performance? is in is going kind And mass a channel performance other And big a stronger performance there? does in Are which grocery? follow-up to to you some

Joe Scalzo

Yes.

in the part bigger brands steadily QX and During general, got the bit improved little their got behind think and mass the fact that improved. the of quarter in consumption I so their better, based early performance, upon a

general, our business general, in to in got other relative mass and business better. channels mass So better got

steady mass saw little a of we bar got business the So, bit kind incremental Even better. improvement. in

improvements leaking the think they direction. right mass improved traffic traffic starting bit and we us. development see given Shopper the for were obviously general but obviously share resets, that’s in we to see a while, of fall yet. our got mass – to in coming I market shopper are little So, position significant important a out that’s And their didn’t didn’t move they better, in in

obviously on. will yet. with closed the that headwinds we eye to at as seen we haven’t one and continue – year be year – of that And the I to kind want think We keep cases that new COVID keep of the our spiking

Chris Growe

you for color. that thank Okay,

Joe Scalzo

Yes.

You are welcome.

Operator

Thank you.

of question question. next John with Wells your Fargo. Please comes with the from Our Baumgartner line proceed

John Baumgartner

Thanks morning. question. Good for the

Joe Scalzo

John. Hi,

John Baumgartner

I guess butter or going the so. still days, early to Quest Nielsen million back running cups like good. peanut the in but annualized very $X around looks the looks is very takeaway It specifically,

you to cookies few So coming and this what you have e-com moving relative product I in the Thanks. could ‘XX a launched compare are for years push will also, F non-measured expect ACV am how wondering, target? Joe, the then progresses channels they how with to speak gate if when launch, of do out you the sort of aggressive expectations of the as you outside marketing and ago? distribution And

Joe Scalzo

to haven’t it cookies. Yes. at Actually, relative looked I

probably faster months XX distribution. legacy historically, organization. ACP than of a in year, mass just drug right. little That’s general peanut because new a pretty I product, think butter will mass. we food organization, And a food build SMPL faster now The drug XX% building to driving bit can it of cups launching within close get the

proven peanut on compelling general, cups, proven item. it whether in business. the in standpoint. a reasonable exceptionally is different XX-month I than – different state occasion, is particular e-commerce. performing wouldn’t, It be a I from a pretty It be high And be a Atkins has to that’s Confections have butter Slimfast target needs use existing or expectations. have pretty to it’s in on we So, think well

it’s start. So, we have pretty to a high expectations for good and off pretty it

it’s to because appeals very ties are and type it different brand, and the lead And and back used it’s about a we optimistic state different – again, product to in consumers brings just a So new case of it. it to consumer.

business. we out the So I expect better cookies legacy go back yes, don’t have look do have that sorry, Quest and comparison to And to build from optimistic. I pretty will frankly. at that we are the

Todd Cunfer

Yes.

to Just that… one follow-on

John Baumgartner

Yes.

Todd Cunfer

a Just we one done start job mean, strong as getting continue to – store to well. will to off really well. it’s nice distribution. that, C It’s side, a distribution the of doing in follow-on have it’s the team item, something store has a history store I really for us get has it to with fantastic single-serve item on C be potential but Atkins lot a don’t a as very we large C not

John Baumgartner

shelf Okay, on autumn to very just successful. big obviously, briefly follow-up sets, great. shelf the reset And then was period the you, very, for

but next or retailers each be marketing in of new between not there the of not anything ahead promotion August shelf January, XX here momentum this of market. ourselves, think in months, as think reset suggest the of have into benefited Was to of the coming are that come to sustain this future may kind more forward kind that discrete resets still not kind yet reset ramping resets kind in you the season of period innovation get you that you successful your You across may through the rest that can come here?

Joe Scalzo

got So, your the to project what like. the reset after looks question I me my fall, in is right you spring want

John Baumgartner

Good shot.

Joe Scalzo

attract the about forward. coming ability want that’s have I the on about all, about good talk from that position said pipeline. items. to it’s to reset. innovation business standpoint. And our innovation this like like don’t that after consumers you We to our both good we that We our feel, brands. what our really might add to to going attract We product we look, in before ideas customers happen So the and an continue feel feel

a brands that – think move be think to order the I category. leadership appears in drive drive there I to to

got that appears play have and set. brands of we to the in two the to us bigger that So

So fall a still of we that, are early I but innings feel in about good reset.

how victories January, we declaring that Let’s see April March February, performs and in before start March, May. in

John Baumgartner

Joe. Thanks, Thanks, Appreciate Todd. it.

Joe Scalzo

Yes.

are You welcome.

Operator

Thank you.

proceed next the Deutsche your Bank. line from question. Ali of Our question with comes Fiza with Please

Fiza Ali

congratulations and morning, good from also. Hi, me Yes.

year ago what back in on So, actually you on not were that the quarter results I expecting look actually quarter, outlook, the this this perspective half some your weren’t an wanted at even are just away far EBITDA. to a and if I I on providing better you from line we top but get though

to some other that in have maybe So, and been have about been by weakness talking on-the-go you we even that e-commerce. these accelerating it accelerating seems able ways, offset forms

would So, risks things uncertainty and just especially the opportunities normalize back from half, wanted and comps? frame a light in you of to the when the of you hopefully get how sense in easy

Joe Scalzo

That new and probably the – softness buyers volume buyers XXXX ‘XX Yes, into for year thing if the you multiply And Atkins will second our some so, given was inability exclusively haven’t almost sign. business quarter encouraging rate. degree much very it grow put year encouraging quarter The fiscal were I to the the buy the tell perspective as in standpoint, volume a we most and driven new That’s the was in point. our of talk well the pandemic. opportunity the great into back the their you the question. the the to means in brand since then to was at are the a was to. time back half accustomed thought business, that look year To grew from at by at second the of engaging miss the Atkins if we rate that brand, to brand. of by half people from this category first a first the truth, in you

as and bars. didn’t home from So, and large component buy has and drive the bars element of that rate much do our of the with we away to business consumption just

a the summarize Can Atkins the on two the brand a we to is continue the bring well that’s get as buyer I big year, obviously, in rate? to if new we buyer. simple rate buy at half and from buyers buy uncertainty the on think, can improve second questions. quarter And both can rate saw we as new I the would the there of then retained up. the back first We

started COVID the that think start Quest. the I comps And of aggressive we prior Can a little obviously would a up? historic the a dangerous numbers? slowed data how bit, think but closer in could a because its and read get by little this Quest, the is second to bit point. quarter growth step Can improve? comparison that’s I little good which half we panel half On a to to business I standpoint, not rate a the it’s back that just have of in to But characterize buy I of more from COVID get It’s at Atkins, right? a year. bar to up to a we one see Quest for is saw data obviously year down back data. more rate lot dangerous, on want we of

impact How year what’s consumption? big And And the we buy that can rate on Can going on the home of important. like? we how challenges then both becomes away buy continue? and rate mobility impact be is really for half we it the forward. businesses the a So, big bars? from bar through as does in to Quest then grow obviously, does business second us, metric So look go

control, shelf, I The I two there. the marketing, back home does the the consumption the share this right it How quickly rollout? does from how does which we And away vaccine does how how overhang come things think to will metrics improve other will can the businesses? that think and we – is then media be, do mobility? investment, well,

Fiza Ali

increases. I forms, not is, like that are sound Great. And forms right characterize worried sort those that it? again trends you grow doesn’t the about business, then and the to as about mobility of as that to mean, the other Is even seems can of continue where I you it these that’s think sustainability concern it way like

Joe Scalzo

confections more be chips tend consumption. to Yes, be at-home particularly and – to they tend

there of by on the So pandemic, forums. affected wide is less those both space

out wide The job the step to to job trial. in to create we the everybody and for. to The brand Atkins, awareness fill of is marketing brand, have the and brand is space. what if be Quest low. on consideration ability just change aware is relatively challenges back standpoint, on Consumption you at is a Quest to continues on build good. business still So, stands job their perspective the Again, the look two brand It’s awareness. from

low consumer group. brand a that relatively awareness group but We outside Quest, have big, loyal still on

that it’s marketing I Quest. brand trial over So, and am on consideration unaided awareness business, pressure, right. the awareness, trying I XX% to continue think your to remember don’t build on

on to opportunity All lots right, matter So, build matter, Quest bars the other of forms. forms awareness. as do the

they order Atkins The than So to to use much got they define because products penetration. us. need build grow standpoint change we brand us the in to issue to form what of believe more view awareness people’s a states standpoint, continue that points different Quest, to of from and got on household helps do to that, and help a product on tend clearly attack and occasions consumer

Fiza Ali

much. Great. so Thank you

Joe Scalzo

welcome. are You

Operator

Thank you.

line Our from comes your proceed with the Please next with Howard Bernstein. question Alexia question. of

Alexia Howard

everyone. morning, Good

Joe Scalzo

Good morning, Alexia.

Alexia Howard

perhaps dynamics, of We measured Hi, I there. bars earlier a to and particularly I have Can look merchandising just probably follow-up. course the pricing in promotional the on wondering but in going that I because business? with pandemic, ask year-over-year pricing pricing in at a up of am did a about on the get to only activity? declines pricing thinking net as side line you particularly I speed in channel benefit be right the data, have lead we out of then is would that step XXXX? pullback through And things, the the Quest And on visibility in

Joe Scalzo

actually benefit from the the was pricing short Yes, that got fairly lived. mean, we I pandemic

Lot on of in out in QX we promotional just fell into to talked those or retailers the If cut really that to May you period reduce pushed QX. in last calls, about activity stores. time retailers complexity couple their March of the our remember,

the the kind other in didn’t a see this have here QX. of in QX well. kind saw of much of We we that – year, of QX of benefit realization we we kind don’t some merchandising benefit So, side in price as normal, lower realization change. volume, similar activity price flipped on QX

realization. really it that a time where we March So, just was for period us price May got short-term, to

of QX So assuming a bunch much is as activity we trade QX, of we higher see lapped as don’t probably rate of kind it’s as in together bit we maybe okay QX, right a and but have normalized. little mobility pretty as benefit now in we pushed in will QX,

Alexia Howard

helpful. future then is M&A on. second look the deals an know now super question for around that and might are and goal seeing I below the we be Perfect. that I’ll pass at? it you And was is now increased appetite what down Xx, has possible a any for your really leverage look Thank criteria That’s for would and to you

Todd Cunfer

to on started the Yes. popped behind mostly the we Again, With consumer with we category and supply leverage that not businesses that users. synergies we customer front-end have for completely branded us – looking assets like and improving, shown assets. attract standpoint. are search fit we We chain have and the started integration all our our to fit track, we up possible in, strong at like ability branded

or $XXX so that consumer in our only standpoint to last is criteria, this revenue. above the million over first. year I shifted are to from And have assets tend looking $XX business think size, look we brand at are million at may the a probably So, we

two nurture we brands. as when have big you So, went challenging to smaller it’s we businesses – as are

bit the meaningful in are little that we size, assets biggish it’s probably on can we it. So at that that are so focus a looking in portfolio,

be just So and would obviously was challenge we it that from the organization of standpoint. size one reasons an SimplyProtein divested

So that of yes, and right we kind assets at those about. are looking are up and now the think we criterias

Alexia Howard

Perfect. and I it New Thank will you very on. much pass Year. Happy

Joe Scalzo

Have a good day.

Operator

Thank you.

question with Bell Our proceed from your line of with the question. next Edge. comes Please Ryan Consumer

Ryan Bell

within of the context Atkins some E-commerce part your has Would some about you it share your going space the an of maybe business. to and perspectives important about everyone. Quest able be of increasingly and become Hi, give forward?

Todd Cunfer

I will Yes, that take one.

for it businesses, it’s can a accelerating. So share both Quest, – of business, from been

as the for continue Atkins businesses now doing his on well in increase right remarks. that both business So, Quest, it’s XX% anticipate XX% side, and said It’s to will XX% Joe we to of opening to over time. close exceptionally

Ryan Bell

around And pandemic? that Okay, the or that’s or about on focused on much would marketing consumer any resolution impacted able the discuss that have have how during weight and period? And management you work Year’s maybe to that’s any how New forward-looking whether consumers your done little thoughts be not helpful. maybe efforts you

Joe Scalzo

is metric didn’t a trigger point I the while was clearly on It’s first had that U.S., great point we it’s the during quarter be question. average, pounds have on hasn’t to we XX would Atkins the encouraging, people a It it to lot about occur that get buyer a the thought back-to-school. start have that. rather on them would now there because ourselves gained Yes, been in right gained the pandemic, acting one to – adults we new in growth the like concern the the right, ask the is

happen merchandising and We January, of in and February it’s to going marketing hoping are March. if as kind and

January, get kind that I that to to part So, do changes think life back in it it making will – when in start plays I under March. will be so people be suggest would people the their of reengage engaged that control to that order the are interesting household key buyer of in that, see penetration, data how the think February, new important out more lifestyle

Ryan Bell

in your believe remarks, during prepared one about could versus sell-out versus talk may one have I And you last but me, mentioned XQ? XQ dynamics you helpful. sell-in for That’s the this

Joe Scalzo

I sorry dynamics? ask or question Are talking you again? are could about consumer talking that am you inventory sell-through you about

Ryan Bell

quarter. the during dynamics sell-out the versus sell-in The

Todd Cunfer

nice last thought how that was from largely, kind picked that reset well some we We headwind mitigated it you be to we into offset. about offset, points to of did had piece So, year, QX because an remember, the the of of period, going QX, we was kind of that. of if pipeline timing that resets. positive benefit back-to-school X revenue little brought kind a from shelf of That up got our we fill time some and

versus talked in year about helped in and prior for us that’s So, seasonal that a did us as some by December about, benefit nice X we the we quarter. And was between shift November, points. have

Ryan Bell

That’s you. Thank Perfect. for it me.

Operator

Ladies question. you. proceed from with Scheuneman Stanley. Rebecca your this our Please Thank with question final gentlemen, Morgan comes morning of and line the

Rebecca Scheuneman

quarter congratulations difficult the and a morning despite good Good on environment.

to about I your average you insights way the that habits look pounds that wondering you. on insight consumer was during the data changed any on bars? permanently home-cooked more when point gain meal XX could pandemic? potentially dampen I thank might example, become have demand emerge could Thank am anything For if pandemic, for for from there that. So, make shows potentially the prevalent, have loss wondering that I that and the meals is wondering if replacement weight we shakes am also different

Joe Scalzo

to data of change have that. formed as our improved don’t I going the during so the that business. observation mobility that has the would that and have has consumption practices just people suggest pandemic habits that’s I that have

going are think, and are is the it I with to to I come food frankly, So benefit going meals vogue that convenience consumer companies XXXXs an don’t cook. return become were they don’t just is going going challenged going always think to Nutritional companies whether to a we ever think of when going think the comes sudden, or back important folks to just important, food it be to go. that and on is our probably the I all trying larger debate to that lives, as that just that convince in continue hectic are and to to XXXXs going consumption I before to to are time meals. big become right. on and we not like happen in eating moms

don’t If see you look a difference at millennials, eating between they meals. and actually snacking almost

think eating see everyday that’s don’t as snacking even they a just I the fact, It’s almost two. they either frankly. as they quite between see so, In changing seamless meal, meal. them as don’t

a am the to not. optimistic not and had to the that us, we pandemic be that in own habits our pandemic. is and behind lot we business the are is to a as than as office, remotely come operate that’s because going that that when with pretty just I to will of guess going the it’s more practices So, true prior efficient back behaviors My

our and pretty will will consumption to behavior back optimistic improves are and shopping that go that business mobility so so And bar so mass we as more norms.

Rebecca Scheuneman

Thank you Okay, much. so great.

Joe Scalzo

Have are you welcome. good day. Yes, a

Operator

any will I comments. and Ladies our Mr. you. session. turn gentlemen, to back that Thank question-and-answer Scalzo for concludes floor final the

Joe Scalzo

continue thanks to has on you participation April. a We remain we and today. updating hope our in Thanks. to safe Hope day. you second forward happy everyone Yes, look safe for results our and quarter again call on

Operator

This you. conference. today’s concludes Thank

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

The Simply Good Foods Company (SMPL) 6 Jan 212021 Q1 Earnings call transcript