SMPL - Earnings call transcript Q4 2021 | The Simply Good Foods Company

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

00:07 Greetings, and welcome to The Simply Good Foods Company fiscal fourth Quarter twenty twenty one conference call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. 00:31 It is now my pleasure to introduce Mark Pogharian, Vice President of Investor Relations. Thank you.

begin. may You

Mark Pogharian

eight, management to statements that on A the operator. Chief in you The various you, by information of provide will call to evaluate that I EPS. pleased with filings. Officer; of August am press adjusted results the President the no overview of risks XX:XX at Joe flow are refer section that private today's session. effect on company an are XX:XX During will Chief an obligation Officer, will remarks of investors. these cash events. and A an issued listing and our eastern it its and useful The Good will we be to to will A www.thesimplygoodfoodscompany.com. Simply results call, then morning will and and a welcome Executive twenty ended available. Additionally, Q risks to the as warrants. full-year based be adjusted relates such on can be the of believe also found subject treatment presentation to this to the measures to quarter Todd release in certain earnings basis which undertakes company subsequent website twenty performance and Note at archive financial Good today's uncertainties we exclude cause actual to update XX:XX followed one. asset-light fourth the Scalzo, This approximately Cunfer, Thank and and diluted may time. of morning. investors twenty statements we detailed Financial course mark-to-market Foods Due results, earnings company's for available you non-GAAP model, the XX:XX Company provide company’s of and under make accompanying the a.m. call business today's strong seven the webcast, EBITDA release is copy company's uncertainties release XX:XX call, materially. of differ and being The forward-looking today's SEC company's that

measures We We release XX:XX intended have of measures presented adjusted Executive the the performance refer I'll in today's a Joe information and to these to a key considered from the in this adjusted business. not in today's GAAP as substitute a press to to financial of reconciliation items reconciliation Officer. the measures Please release. most be believe to included prepared financial comparable XX:XX GAAP. press a accordance accordance over underlying for now in Scalzo, the Chief with are President information the The presentation of isolation non-GAAP or is for detailed call with turn GAAP. indicator that, of With

Joe Scalzo

plan growth pleased business with ways us our marketplace. of twenty one. before in We're we'll particularly half opening billion detail, results fiscal environment up your Good Mark. the challenging of with you in quarter second win you, of one outlook executed We it multiple accelerated our twenty XX:XX one, to one and surpassed dollars net gains. of products. with it you us. up Good discussion a thank provide The financial performance across brands, Simply in well brands. will our our Thank customers morning, the business and discuss with in Foods' brands as a Despite of more fourth for nice results and the details on XX:XX fiscal twenty joining some our Todd to generating our XX:XX twenty twenty diversification the key recap Today, provides year in both questions. Then our bit twenty sales and the wrap our exceeded with I'll and throughout

commerce XX:XX back performed of launches that the were environment distributors us and as effect transportation snacking continue things pipeline inflationary business, group and past year, increasing and enabled gross XX:XX discussed, innovation of grew peers the suppliers, our responded successful to chain during access our that coming the consumers. to minimize Looking and entire to formats cost in on the the a new product procurement, customers more The occasions. most collaborative give margin related changing strong and focused New progressed. on is service new team external retail to challenging our on manufacturers, our an service our challenging quickly to have team environment. well period Food the As We as the us work such well likely many and our expand throughout with increasingly and customers in e challenges U.S. as months to will labor six as nine year. year supply

asset-light significant Our Importantly, in XX:XX the business these proven that us offset be competitive price a a increase has effective headwinds. we in provides advantage cost September times. difficult to with announced was model outsourced against these twelve June

demand to to XX:XX brands, investments solid operating sales environment continue with and to executed fourth against to future our that nine our growth. We plans our Lastly, I XX:XX net while volatility the and a to point been uncertain our want consumers to sufficient who and quarter have amid economy performed as pandemic. an in the position well us in despite superbly stable operating and us margins sustainable sales remotely. organization sixteen cash our team support Importantly, supply, have recover growth deliver from up our had both leadership recognize and in They employees in make enabled earnings flow steady percent.

mobility, increased Throughout fiscal and one our of our low about category half due committed twenty year right and digits shopper declined quarter similar restrictions. restrictions half Convenience the four the was consumer fourth long meaningful doing result, line and more Improvements as quarter. margin in As mobility last single year, things combined quarter gross well the our first of Stores. cost consumers. + to pandemic, favorable shopper sixty MULO trade mobility mix, year's was promotion basis the to supply outpaced workplace with IRI increased chain relatively same than versus executed rebounded twenty and versus expectations. the customer in versus XX:XX XX:XX snacking expected resulted last In product growth favorable As traffic in half. and fiscal second With with offset and line Foods the movement half workplace In increased and change to in and nutritional a of controls. remain no inflation. in increased the COVID Adjusted EBITDA Simply traffic second quarter performance offset year Good to customers, COVID-nineteen A due trade G sales was the and percent more fourth our about seven last period. higher percent eighteen thirty increased category than five sales This we've retail measured takeaway The Good ago the forty percent. and category of the primarily category of twenty the year year period. to the compensation. QX Foods, Total point growth, nine U.S. business, with the over incentive investments, were XX:XX in cost the first Simply the promotion point driven in for point term marketing solid the eight channels the million, favorable in the the XX:XX points and retail ago relatively

increased twenty Importantly, time Quest segment gained active category, XX:XX of respective includes our all in thirty which second the brands half their one. share The the twenty year. and nutrition segments fiscal weight during nutrition the percent sub of in management of the across frames active five

from increased a takeaway Recall is half product And and penetration, bars three below the fourth and of the five twelve the Let takeaway, occasions up percent the over The a was similar between e-commerce benefiting year. fifty forms. greater than single Atkins performance. channel in rate digits new manage the management point as Atkins me chips, sale of household the and respectively. performance the traffic forty turn being year percent, the point measured total continue percent remained In more percent Quest segment and due Quest the and point to improvement within takeaway the year, we innovation. users’ for buyer rate our ago Quest, than up year, and extremely and pleased percentage it second And takeaway weight growth. snacking with increased retail Atkins teens pleased Retail and was and increasing our percent. year segment all takeaway e-commerce the traffic, in takeaway portion to Quest Therefore, Quest along was We where and in sales. Total and in percent are MULO XX:XX in to versus bars trips and done the the we're by universe forty of second across increased in was of products percent snack C-store work. growth outperformed in increased strong continued continued takeaway half now shopper well about at nine As of eleven the QX period. XX:XX particularly mass period. percent network. eight forms QX the customer, bars’ retail IRI buyers low Quest XX:XX was for XX:XX largest quarter measured high the point quarter increasing of quarter retail Amazon, mobility second the same retail about home in to chips + retail rate. by shakes seven eight As the measured by sale all remained of segment point point at similar total channels channel, one the XX:XX three historic year. driven category. XX:XX growth nine segment U.S. bars of mortar we're takeaway Growth correlation by expected Atkins confections. year growth key sixty Growth driven channel and the brick about increase percent. do quarter, remains and four measured QX Atkins rebound retail bars e-commerce and channels. increased quarter hundred resulted the success strong, supply percent Buy in percent. the Confections robust up see with five moderated with in to the percent in XX:XX the Atkins with shopper of in outperformed quarter twenty retail improved four double thirty year, cookies, digits Atkins consumer nine shopper mid-single retail on exceeded In Full Atkins increased measured to basis biggest consumption brand. with eight percent in growth. of opportunity point fiscal e-commerce levels outpaced performance recent increased channels. retail demand up improving

with ensure We mass up percent traffic twenty and to Universe had channels business last percent and retail of and e-commerce U.S. of thirty year. have good these about as promotions no sales. XX:XX dialed taken these during mass Convenience fifty pleased we We retail C-Store, have with was percent. growth Quest be we'll both well Quest We forty the at Combined continues of QX five increasing percent supply trade total across disruptions POS all fiscal sales channel and in back up XX:XX to percent do were particularly about items. chip there Quest nearly growth actions takeaway stated key And And the represents programming are foot this in of of Stores. quarter forty quarter, another QX respectively. channels. and important increased

new and advertising to with their in as time all addition the XX:XX NFK on who is working the air [ph] We'll television for in rookie, changed are to messaging Atkins anticipate remained The four growth year, across is to fueled announce thing efforts And two forms in focused WNBA air digital I'm all Amazon and across that all advertising own advertising product fund approach solid on pursuit slide. year, XX:XX campaign professionals brand's Our a now. will by campaign with back worthy our careers will as and their also to which and Quest in focused their be the of that some advertising will passion. history. Lowe of fiscal fiscal quests. pursue line we strong with very bars growth. at marketing in first well on life. Rob on A taking marketing marketing In see you healthier business XX:XX individuals personal to and nutrition support be increase major sales was this Our forms. [unheard] that new this beginning excited athlete Common launches, they're

the have strong new XX:XX quarter products forms. a and We good brands In all we're fiscal in in pipeline our innovation fourth across pleased of have a with balance results. year both summary,

fiscal XX:XX innovation year year believe to are should we balance chain impact. first with the end the and costing invest two, Todd latter than our Now, look advertising you turn consumer expect supply remarks Todd? ago positioned earlier, as well the We're the solid Pricing deliver I we flexibility will then a fiscal the financial over We objectives generate inflation EBITDA XX:XX difficult business our brands a and solid change some XX:XX well on place greater financial any executing momentum significant this and with both outlook. are of I'll stronger prepared predicated place to growth half and with and call related as value. in who And cost As to a to greater savings to mobility. assumptions good period half initiatives adjusted have our to in start delivering We year, we growth, which twenty isn’t twenty as net excitement. on our build that continue and workplace headwind comparisons. we to in that provide with increasing second the against to discussed shareholder of in details. be year. retail expect in have sales as the path and mitigate will with to meaningful more in the a details the I'll plans our

Todd Cunfer

point will two core XX:XX our percent The across major point lower forms increased of quarter points by XX:XX begin sales to Good North realization Thank one seventeen driven channels. million. driven I you, Atkins a by Total total slight growth, with Joe to percentage sales. contributed review a business and Simply promotion. primarily company benefit price in Foods was sixteen and net QX Quest volume and everyone. trade good net morning Net sixty fourth America nine

two sales both by and three business strong combined a P Quest. one hundred sixty exit for million point last of driven dollars, benefit profit the two one five percentage period. and in core forty of point point Our international were simply to was increase four Moving brand and points divestiture the other ago gross point growth gains on point point headwind. increased point percentage percent And Atkins and to L percent eighteen an items, business protein versus a the was six the Australia European basis year margin versus year. XX:XX two Gross

headwind As expected, a supply this was inflation quarter. chain

to results year were profit adjustment of restructuring three point prior increased cost chain in gross Quest synergies. percent profit cost point EBITDA quarter point an inventory by six half dollars purchased point percent. expense Moving Quest with million step points. billion cost Gross month second step purchase one In eighteen building in current million, compensation legal expense largely related six point full barring investments inflation should ninety twenty that liabilities cost twenty two dollars cost, non-cash point income of fiscal million offset initiatives of percent. point integration the million point partially due dollars non-cash change the nine However, thirty non-tax materials, logistics. This and one deductible the three to favorable compensation, of loan. of raw warrant to The non-core liabilities. point charge percentage point pay to a accounting based five increased the promotion, our XX:XX related increase to This fourth Joe seven non-cash stock customer of other up acceleration our two point ago margin was driven by year excludes it increase business two in by million the forty seven sales and nine one expenses, expense. five point seven was was price was the and million on from three loss and million, higher twenty Recall five the A three up significant expense accounting value increased Full point previously the the the million inventory brand income was warrant than fair dollars trade thirty G two XX:XX fifty term point Quest seven channel year five Gross went twenty the acquisition. twenty related XX:XX charges in XX:XX declined basis five million more five non-deductible these related a nine eight mentioned XX:XX by as step a thirty twenty dollars as dollars rate non-cash As and the remeasurement twenty twenty was we private QX million Selling and to of affected related supply P saving Net due to to point five increased control. significant lower private respectively. XX:XX offset fourth to period. point point as in expense million three driven anticipate one quarters a of in one the marketing the lower higher twenty items Atkins seven up twenty mix. well to tax to was year L, hundred point pressures to three and of product impacted includes down by cost fiscal as The along higher point effect interest inflation loss and and due corporate million five twenty impact five both the on net one by point offset and percent acquisition one Quest. follows: in incremental incentive versus eight XX:XX discussed, sales million levels. two into the four packaging Adjusted to last and year.

point Joe Please stocks. calculated income, outstanding the given full a zero less XX:XX federal In year state warrants. of last lower one six of loss as nine point twenty an last change in four our XX:XX per [ph] sixty need of point million twenty XX:XX well nine point versus Net twenty measures. about term as tax Turning two A of EPS, interest million million and two non-GAAP percent and private last for Therefore, diluted excludes nine Depreciation point around expense impact XX:XX ten hundred two point of deferred private dollars one resulting higher one ago the the tax year, dollars EPS eight ago down versus by a inventory its interest fiscal percent gross million with zero one a non-core company Barring margin change million income as excludes sheet about similar restructuring impacted cash five eleven the lower hundred and during hundred year. point fourth at cash hundred dollars to was quarter, rate dollars the three eight is fifty EPS diluted of due was company Adjusted increased the QX twenty thirty cash shares four was point eight, nine and zero As one two adjusted new we year two seven In being GAAP six three we're this twenty zero or million the amortization be expenditures twenty expected point the two that period. the million financial Moving year forty and amortization and twenty generated GAAP. Selling of dollars and compensation EBITDA reported and million fiscal and expenses million was The ago nine higher adjusted offset integration expense five rate was XX:XX twenty loss warrants Depreciation expenses, seven period. of are our that four last points year compared twenty for eight the decline brand the the balance of increased and and in four at for two explanation trailing point to one ratio adjusted similar year was thirty XX:XX building in diluted point two to authorities, seven to was dollars and the to the was cash the six year dollars. diluted partially rate five respectively, Full EPS three five dollars nine of release eighteen legal to versus point of one, to growth million of is outstanding twenty the levels million the period point liabilities. six eight related P interest of the to XX:XX point forty year diluted due company refer full amortization We Note reconciliation million the XX:XX as includes diluted one combined million point year year including taxes. the to dollars. to fully dollars in twelve million one debt share value incentive versus percentage expenses This and financing. Quest. to two year, year income non-operating due based non-cash twenty five EPS related million million four warrant twelve XX:XX was point warrants August EPS, be point be had was the seven and financing to of tax cash and and exclusion XX:XX full dollars, and about dollars hundred zero income the from shares about reported point one private quarter the two full I by This dollars, the point nineteen or one the for year about under three XX:XX to fees. point of to point QX capital five due six Moving by percent. as while was point five Note associated adjusted recorded twenty ninety down nine the the one gross million] primarily outstanding period. month under of to turn GAAP sheet. full point [forty twenty is balance gross year. last point forty flow. Quest increase charges an per fair higher seven expense income difference year year the to primarily driven items pay carrying by was due value the full higher these to fiscal year point fifteen savings ago remarks. driven and fourth expense dollars million L, four twenty expense. Quest. non-cash period. five of warrant million twenty XX:XX liability paid stock point nine sixty versus and EPS was was In increase point fair Excluding this expense, the of debt and cost, million point interest Note costs percent. dollars. on two the by the principal for impact five year twenty. the deferred G we diluted primarily similar same and the thirty dollars. one EBITDA The and five of fifty zero ago private hundred for Fiscal full bit seventy percent. that inclusion with interest one million increased related anticipate the twenty a nine margin fiscal million non-cash dollars and point compensation, point and Note dollars hundred to and Capital non-deductible the than the thirty and million, EBITDA period one full four to comparable the closing amortization to four five ninety in profit. six our about expenditures the percent seven share in press period, due point versus charge were diluted of point million, shares call for four to point restructuring on as flow zero items dollars a operations expense period. This today's from GAAP was million in classified times. private The outstanding like and for safety were business was profit balance fully dollars twenty we of that year to end adjusted full would point year higher other anticipate initiatives net one, which million, more EPS gross liabilities. Adjusted million basis of increased dollars, to percent year remeasurement eight assumes of integration Quest equipment dollars, to forty versus marketing year. of the an now calculation ago four The six a an amount twenty point hundred XX:XX non-cash seven and increase warehouse. forty point XX:XX zero and the the one, back one

Joe Scalzo

two, last expect the In our fiscal and twenty twenty momentum confident build and Looking Thanks in full sales strong metrics twenty XX:XX We're on change plans deliver the mobility, Quest workplace sales solid advertising, will as expect we'll growth. from are place to growth. year. difficult in Todd. our in we one. XX:XX meaningful headwind the year adjusted net marketing EBITDA and to fiscal fourth year business for twenty two, of assuming in innovation expect Atkins XX:XX We versus quarter, related we no and greater anticipate have in key both European adjusted at drive lower net growth the point cost EBITDA, will the and decline the in we versus went to standpoint, increase margins period. the ten an over initiatives with twenty in chain cost and pressures, year current up the effect expect The adjusted sales rate. percent fiscal of largely supply to of sales in twenty the savings business inflation an a eight slightly percentage of will ago the year. chain as includes increase fiscal exit. XX:XX cost increase headwind growth the that that last percent first proceed than Marketing into half expense half as result month G be barring first than to year This the offset price expected inflation We similar than a line Supply to the a significant more inflation rate. year should to the year gross these modestly cost anticipate net increase the to from in in levels. expense the second interest XX:XX cost sales And greater net adjusted result the should EBITDA XX:XX comparisons quarter. should be that increase stronger step through diluted to rate growth A EPS be quarter be of is leverage and growth one a and growth Turning the

inflation cost and prior a of is savings the due increase the be should Supply initiatives, expected XX:XX greater raw price material existing cost flat versus well the coverage, be year. as gross year. to as balance However, chain relatively margins headwind for to

on to deliver and business with to COVID-nineteen, such, remain against of in position we financial a are over value emerge our our growth to appreciate ability one and XX:XX challenges is and our term. more us company long interest to short term in our strategies long objectives Operator? our the the path prospects. As confident as questions. We executing is as in invest our now capable take our everyone's your available organization to business from We we're stronger shareholder increasing the we

Operator

Sachs. [Operator questions Our XX:XX Thank Jason of proceed Instructions] with first the questions. English with come Please from Goldman line you. your

Jason English

Two XX:XX Hey, morning me good folks. in on slotting and year. for a questions. great congrats Thanks

levels service you where available the other meet online walk some categories? load of shakes, lot be can be you there's like related, your give how when demand? service the of us status capacity, holding us not Obviously back able And Can things through you with expect capacity – bit Give to but you of disruptions the also quantification in constraint. chips service be etcetera? some on you the much back expanded that's a stand levels referenced to First a and industry. and situation or capacity in the capacity and then back bars online, to you across

Todd Cunfer

XX:XX Yes. I'll start up with chips.

on why of part That's back promotional chips activity had we reason quarter. pull the did in the fourth realization. we price favorable So,

cups tight were chips in peanut we So, on QX. and butter

customers position products. service of much that good resolved. Going about been We actually really ability a both the on better those to into We're our this this year year. has in feel

Joe Scalzo

XX:XX to regarding supply chain covered, categories. other in but a experiencing Todd of we're our beyond chain what one kind service our issue in discontinuities supply bullwhip no that question episodic single answering from kind a your just And of There's Jason level. effect create

ingredient So, not you up everybody pretty We're by you with or a showing on those much a than things right service as case to I deal on an where nothing dealing different challenged [indiscernible] with being day. shift. a is deal really experiencing now staff kind are sector think with not the every of able basis, those case levels

Jason English

But XX:XX nothing It Yes. makes sounds serious. like it too sense.

Anything and at your two appetite interesting times, question, now of second What in complete. you are conditions below Quest effectively what regional marketplace? now seeing the The light those in acquisition leverage valuations? integration is

Joe Scalzo

assets. we're hungry to at have Well, always capacity now XX:XX and the we look obviously

is market the busy. So,

the busy staying kind our We supply keep at So, us fits it folks our well as build and is first are. strong targets, brand? like innovation our it's So, understand thing the assets to we opportunity pretty aisle. And busy think how we marketing And we, those communication right for we're screen as right will the there's in of always and to we've be we because we always category, we externally looking things explained selling the like chain, is accelerate in understand find category, our capability. the if do the we do now. how brand staying we consumer patient the to

Jason English

Thanks hear. to a Good pass XX:XX lot. it on. I’ll

Joe Scalzo

Jason. Thank, XX:XX

Operator

Thank you. XX:XX

Please questions proceed of your with questions. come line with next the Our Growe Chris from Stifel.

Chris Growe

will, outlook quarter XX:XX Hi. that If you you Atkins morning. there. management, different expect demographic add and in my kind what I’ll fiscal for that that ask twenty of weight hopefully for Quest and mobility the two? throughout kind relation as if users, Good active twenty happens first just if improves then of, profile for and Nice congratulations nice can to how nutrition and as well. I is

Todd Cunfer

XX:XX Yeah.

sugar brands part are and most sugar your active in very and weight nutritional active. to the in it's carbs similar. of Chris So, majors benefit, know it's of the for it's both targets kind The low if benefits carb and thing, where be kind profiles active, philosophy consumer fueling macro Quest, protein the the and low you thing on the interesting The So, the is but already the with nutritional low On thing of and this. are pretty and kind ability and Quest consumer majors low the management very target, benefit, I of being right? of very, about consumer because protein, miners similar, interesting is nutrient, miners the Atkins XX:XX kind different.

be to more tends So, younger, it tends physically to tends be active. fitter, be to

lose, be lose of little better, groups under a to little think kind audience Both tends So, Atkins to adults of five. bit to be got be, older. target bit tends weight XX:XX thirty the little to a have five. bit demographically, little on little bit bit thirty a better educated, to financially Atkins older, of and a over but tends a of kind weight to of tend

brands. overlap the no So, little very, very between

Chris Growe

you XX:XX And as through go sorry. ahead do look you year, – the

Todd Cunfer

that second it we've during bar enough, What will XX:XX accelerate of Even well. brands? Interestingly Quest is of improves, start the think And Amazon Quest second largest As accelerate. we're part seeing was really we're the year. Atkins been of if but even business benefited, Quest done how has bar channel growth. seen half channel affect traffic is customer the to [indiscernible], better. for encouraged the XX:XX we have, we mobility business the now your development our question? businesses the C-Store by extremely is the

do Atkins, buy rates. been and and to digit mid-single which holding been been important the the work what's second the last digits, was driver level the back around kind doing twelve But absolute is the down occasions up quarter encouraging So, with our we So, being growth an the holding is growth lot double year has percent what buyer an is on snacking third understand on in XX:XX to happened right? was same, about composition Atkins has rate of rate, half fourth analysis kind of for Atkins of year. consumption and at has buy down

if So, but on particular to we our would would improved, see assumptions we on our business, around our in see, bars. on build didn't particular business we this in upside expect and mobility and Atkins into

Chris Growe

helpful That color. you. Thank Okay. very XX:XX was

and guess you're I been from and a resets, here a shelf have some resets question quick set high you follow-up what at seeing and, level or around now the look shelf I shelf your Just there shelf I right guess as a for brands? had space and

Todd Cunfer

Yes. XX:XX

that history a The as the good fiscal are brands growth on last we speak. I'll first. So, happening both fall talk in sets little ones year. are saw Shelf in happening. We the happened

We pretty for expect to be positive us. it

on is good. As brands we've consistently, pretty said both new product pretty pipeline the

the healthy. brands So, of their the the importance there. category, And of categories on keep kind large would [ph] consumers And To also the important we larger XX:XX we brands. to to retailers focusing aisle. would expect and relearned so, performance general in see and [rails] them pretty drive have healthy focusing good more to I study say, category keep

So, from those we're tailwinds. benefiting

Chris Growe

year. well That XX:XX work seem to this you. past Yes. Thank

this your appreciate morning. I Okay, that's great. time

Todd Cunfer

XX:XX Chris. Thanks,

Operator

you. Thank XX:XX

Please questions. your from questions with the proceed with next Wendy of Our Citi. come line Nicholson

Wendy Nicholson

Hi. XX:XX Two questions.

the in think years as that longer I now advertising productivity from before a know job row to into freight A percentage you more, and in a sufficient through, much you gross great do sales. either or you've a a able but you pricing? short-term, how doing take gone you inflation you're have need for there's go, further to muscle question, as in And more? that SG&A than you enabling And profit. perspective? to of First, It's faster grow start you been then adjusted that Thanks. you think has has so, there took great to more how fat G reduce commodity much do EBITDA any operating June more talked second to pricing wondering is term, about I need cut favorable But think, leverage there for I'm been three

Todd Cunfer

Yes. XX:XX

the one. take So, I'll first

first, the start pricing, gross now. supply out and right to in year, gross ten proud just and of there points margins sixty So, margin ability we're our off for super basis points by perspective, basis just this environment given from the expand I'll say, chain full QX,

about our of that priced We're we're second down. growing manage especially to thought, Commodities saw yet. of the commodities to in accelerated be but by inflation good might are still very we're see when that slowing price going not the inflation that slowing we XX:XX To at feel see down, We we are coming. we leveling and still the sales execution half force. hopeful aggressively Second, took rates. frank, are off our some seeing some some we increase, not year, that, really

some do, cost given. now, pricing modest to right feel good we feel we So, like our do see increase any don't if additional in the assumptions. XX:XX about we We we've need guidance

now. can trade that to. so have why an that synergies and the we levers combined expense, expectations we company. through from will that. if are, there's leverage think back at got But the would there Quest pulling beyond see I got acceleration play, point. we've what executed synergies We’ve the right I getting almost manage our is, much all headcount One some some with great two reasons little that SG&A Regarding we this price XX:XX we in we reduced we're a that the bit. are say we I'm integration fully leverage, Obviously

G top business, XX:XX you're Second, in growing growth fifteen the percent, significant ten can, when So, the some percent, twenty maybe percent and you you helped. and has line, just percent, leverage. A get growing only percent is that four or five is

Got G I back on it. don't as get the I and in sounds pulling A. our So, think to we'll L That see leverage absolute XX:XX dollars and continue business P accelerates. great. us But in

Joe Scalzo

want position of color job little just what has that put a in of I We a said, XX:XX Wendy, modest, this a add is take enough price done in aggressive the seeing need it what was September. us well don't pretty in to increase being Joe. to to a again. phenomenal team bit I’d it estimated to, and price his see enough and soon he’s inflation Todd cost

So, that in have a where acceleration the fiscal year. We mid significant frankly relatively about we're inflation in to probability. think and see upper XX:XX would relative through very digit of the the that's year to pulling single shape half cost low right like it feel to think we we a pricing, is even to now lever, second good commodity

compelled going took pricing some a being Part seeing not it be success us aggressive enough too take not inflation been too in to early cost marketplace. view of to our very So, optimistic Todd bad. really the and that point congratulations team. has We it's that to of aggressive

Wendy Nicholson

peers. XX:XX very your That's sounds among fantastic very, rare and

spending people So, they definitely you're congratulations the extent did front. to of embedded two much see Atkins mobility do remind flexibility as in promotion you back Quest those that you an that on or levels activity? do as that to you of about how in of lower for your increase promotional in up promotional your either promotion type and they have sort need twenty go work, or by step eager or forecast follow-up a to to fiscal talk But step-up and just activity what you to have

Joe Scalzo

believing XX:XX then that to half back the We tend will to year room always lean first come and of sales the in the have spend. we'll end

to continue programming into marketing So, speak that we'll as do our we're leaning and through and we January February.

Wendy Nicholson

very XX:XX Terrific. Thanks much.

Operator

you. Thank XX:XX

Our of with Deutsche next with questions your questions. come Bank. proceed Steve from line Powers Please the

Steve Powers

thanks Hey, XX:XX guys.

particularly your to that's decisions like that around Quest in assuming more see cookies. opportunity mobility you So, about some maybe I on would consumers thinking influencing past, cultivate of that being of or fact about that just occasions could you're not and now that maybe you mentioned hoping you it? R I'm to, experience and the successes, the around chips whether more particularly the D talk than in been was are how had independent how occasions earlier those if with prioritization go in Chris, and you've assumption of on winning the things less tied conversation the maybe have

Joe Scalzo

Jeremy focus portfolio and Ivie. team has here and D portion by on coin XX:XX snack Our before Quest R what of we accelerated our Mark under acquired was is underway the led the phenomenal

And a knew states days confection earliest We now we it. on business we for So, we've growing and chip from very really shakes. Quest. business big a bars business in a is, had to a confection business that Atkins from the use it's the occasions and because XX:XX incremental cookie strong need had have focus a and and reason on and

new and should because bar at lot by of, forms So, us use form understood By and So, that continue to business. nice other we and bar occasions learned our we kind states to emphasizing innovative particular those business. and and of in transit. of to kind is, of bars that, a continue XX:XX need little use that we're deemphasizing Along work consumption opportunity is to our we'll then fortunate would portion and COVID do in consumed not our occasions. our business. and grab we diversification comes that a be that consumption became additional Atkins occasions a offset a expect incremental on while you of We're the through important it's the big way, to we're our

Steve Powers

Quest elaborate it presentation now in the Atkins about Great. side of we're maybe leaning And those year on what in XX:XX you're the and terms what to into initiatives just you about the hoping you into and in both some the the can talking then and of achieve, in broadening first occasions? ties you Great. the especially mentioned half Quest, advertising of that just of of if on talked

Joe Scalzo

Yes. XX:XX

and brand the is marketing more of grow pretty in. the you're underpenetrated much running, buyers So, this household bring penetration regardless category to challenge and is

to modest into weight lifestyle think prospects. are a growing right. awareness. loss We built the feel brand a case big management all repositioning case good brand. that. the away In biggest has we doing of So, single from efforts brand expert, still fast, marketing good weight pretty to the are I The view do a brand I have experience that. Atkins change really to knew. the the to the correlation everybody brand. knows eight that. of XX:XX high it's awareness years of And they In been always was Atkins, with Virtually, a growth buyers. of low job done growth around of what about we've the The of Quest, brand focused challenge on how brand our their So, ability XX:XX with of point programmatic relatively grow carb Atkins, marketing

showing the last that the the up at people shelf tried. really met by finding So, they've over great products and brand have few years,

to view I awareness, about do about, changing about the Our view drive And what the people's of challenges. drive different what brand two buyer things. about Quest two campaign at the strategy, to pressure funnel. is on same to we've those shape but awareness, which accelerates you got introducing efforts repeat. create brand does. thought consideration, create of they about people's trial top brand is So, other the so, marketing XX:XX And is the to and them is and designed got doing the in you brand points new drives brand, investment One opportunity to the penetration, point brand. our marketing invest of marketing

Steve Powers

to If to little XX:XX snacks. us kind pacing asked awesome. could in, just progressive twenty, of the theoretical give Thank sit twenty And Joe. that add a bit at more relative through we've rate? about Okay. just just fiscal the where where your Jason been That's capacity through twenty maybe one to I back, fiscal going in Thanks, the starting one run twenty twenty twenty guess then, fiscal sense of initiatives capacity a I three two? expect squeeze of you. of in you

Joe Scalzo

off it been kick who's I'll then Yes. I'll XX:XX closer and to it. it Todd, over turn to

expectations on both. exceeded on cups are is peanut The first consumer our because thing our I butter would the and challenges say, response far chips

go not did we're we supply going marketplace So, challenge. believing to the into have a

we as we every move demand. So, is absorbed This products. about we said last falling great us XX:XX seeing were not this on not would provide really us. short so, two they us. going the been provided they chips have the supply, about it as with on what We a more And that through response supplier to consumer year time year, we is got

turn business And add And as moves chips not Todd. to inventory on that keep at time, over I'll level. able talk we We changes takes He with up down to So, so, you to able capacity in so making we're the service to the could inventory. slow to capacity we what were about build to we we, we build is weren't that appropriate knowing demand speak. an some service can it

Todd Cunfer

XX:XX Yes.

into ships month products on got we short so. very cuts, capacity or both both at largely again, or tight but added point, supply we So, behind it we in we've earlier, and last the QX. on talked is about us That this were when on

at other FY this twenty cups have So, actually FY We twenty products. now year end some on coming right pretty the for twenty beginning more two. chips and shape in of twenty actually of three capacity in the on we're good

three we're shape So, I expanded FY into the this twenty we good will actually think as capacity for then we in twenty to year business. get pretty and grow have

Steve Powers

XX:XX it. to Okay. Thanks you both. Appreciate

Operator

you. Thank XX:XX

of line Blair. come William questions Andersen your from the Please with proceed next questions. Our with Jon

Jon Andersen

and complexion you're capturing? innovation the in growth the digits or and brands? year. Thanks. everybody that penetration? and morning, Good you penetration who household said, on it's as and great any with the household little current snack Atkins of seeing strong you correlation today growth, XX:XX of this the year? your the growth the Are a kind of I household to about that, consumer wanted the both I that the penetration to kind back of it do highest sit a particularly on on congratulations growth commentary state are year household brands ask to Is brand. And strong you're that come household based that penetration, occasions on around So, bit you point, up been attracting? has the think Where for the the double for growth Joe, these new consumers of because penetration two

Todd Cunfer

XX:XX All right.

sleep which You're come and talking time, to thing getting. the don't is I about they where going who right, about we the all from

The growth. management previous that their thirty as And growing about our eight the was say, benefits. those. move and of a time, focusing weight around the which were XX:XX eight were on public what had consumers carb job from shift, more million is, years time successful three the brands, having happened we nice they study, call we XX:XX at of carb consumers, did one on a identified we So, done those did we positioning kind lifestyle Two, diners] what we we there both penetration we research thought of had the [program in around Atkins targeting low who million low consumer somewhere went and [ph].

of around lose So, targeting he we've knows – It's those, after Atkins going had or to weeks, fast not consumer but to people when in keep he target. And a a we the weight XX:XX skinny how weight that that to and that that and lives lifestyle. we've last celebrities living eat about a pictures Lowe, control? pre study communication, year, – eight I haven't and of Rob it's been I shift been So, low not seen from a every self-directed with Quest, database it we consumer, day do because was source loss, consumer weight my never dude, growth, about surprise. a standpoint. the post and case lose In pre Quest pounds And how at last in it time we to under those a loss. twelve weight gathering led carb looked of consumer our in post on

is what's middle with I'll Some to in and of more, I fundamental they do I I right? value you. thing about marketing that do other things. do buy as Here's more number what we're And been of do is how questions, I've the to has trying The standpoint, things to work household the soon want we're then stay, working stable questions chips. buy do to and from XX:XX team get which on know The incremental marketing I those the biggest but Quest of buy, to learn their significant been penetration the stay, marketing, by how they effective share of on Quest to as that we are know growth buyers bars? growth do those were products? brought all series them long in asked single we they life chips forms household them more How The the XX:XX and a when know. and brand, that still contributor a to other it in, bring they have much why penetration of already leads they new

Jon Andersen

XX:XX That's helpful.

anticipated my next there. You question

I'll am a other more brand for and other those serve occasions of individuals which instance, occasions. Quest, with worry this about is it just, with core do the I positioning a of ended active earlier active know mentioned kind So, product for brought maybe open about kind don't part risk on moving orientation you that year additional of the you just I'm or active off you bar where turning not frosted are or about that thinking fit extend it you lifestyles, it forms, is thinking that you lose that Thanks. from that the, call. consumer your that and kind fit that leave follow-up cookies you as core of nutrition, has And But losing that brands one that, into into, you as way to indulgent with particularly you're is the right you it? to

Todd Cunfer

communication. core XX:XX Great change strategy the question, and it and to was in

that being prior one campaign the that to air that was if the was love, just the that around with run So, right. you crave macros on snacks you the went

worthy athlete [ph] sugar you to achieve. an whatever around before The don't things was a that can an that around need athlete. desire carbs positioning I I to low, and So know would in compromise, day, people’s for I right? don't things really is where don't [craveability] those XX:XX I see protein, crave every get and around fueling now, right. those were of even I bowl bad super on be nutrition, it's to they're want no snack. high macros, in is for snack have table. are table be though we a And So, evolution the positioning the but trying I which of Those snack, to and want low

some to self-actualization degree fuel compromise. about tasting that about want without XX:XX I products So, to it's to great desire achieve what So, achieve. my

So, craveability. away we from moved

athlete. even the don't there's products though is snack you an indulgent, of ice nutrition, regardless completely that worthy cookies, of still our this athlete like frankly, elements highly need the It form. Now it's are it's themselves, but about around, you mentioned

former who who changed professional a became an And in yoga XX:XX then their And finds aspirational. we we our instructor, so, a people, in choiceful picked So firefighter, We very right. a kind picked on target the were former two career still person them they're football WNBA of midstream, a who we player campaign. picked very NFL became aspiring office athletes. and to audience professional their professional a two, Rookie, Rookie successful quest and careers because be

their it's their positioning that That life. So And you in about asked. that again, fueling question. exact question addresses and quest aspirations think we the

Jon Andersen

much. XX:XX Thanks helpful. so Very

Operator

XX:XX you. Thank

Larson Our with next proceed questions your Partners. of Eric come line questions. Seaport Please with from the Research

Eric Larson

XX:XX is June, guess, margins bit my and in just in gross here, I a September going I'll cadence and on you probably congratulations but priced Thanks little to clear get profit question my trying everybody, work, twelve. June to Todd Yes. I'm more extend you how your well. priced for as so you announced are

mix few pricing, what's holding customer get in the margins the seeing all So, QX first and favorable as maybe and so but might XH? half you're we on a days you taking in if that in gross and comparison product up going our conservative should your more half, the a margins stance channel basis be conservative be to is a on is still second

Todd Cunfer

Yes. XX:XX

to coverage first second as us will in margins the goes and we year, attractive year beyond mix QX we QX. do but said had which gross this QX. quarter. of still gross prices first QX at despite mentioned, be remarks, of We through not correctly you we've much actually margin the see pricing allow have have very flat. XX:XX said, going QX. half get throughout is we the relatively have into that That actually once we we our keep in product believe had for you So, as very enter and half and as we to flat should attractive So, pricing and quarter, still the relatively still, some coverage as this a the And that in we're away coverage do of XX:XX channel We we the what not coverage the largely benefit quarter. favorable some first in

get contract QX but margins relatively stable gross can we to So, beyond, will first you the in be expect margins and into start to as quarter.

Eric Larson

next question for Joe. And Thanks. Okay. is XX:XX

look these slowly of bunch at but covered sort your think it up. quite points going on a well you think go screw So, back to your want you've because Quest, Quest whole you don't I already, of at Joe, we initial we're I said, guidance when to

the on I you, Quest give at it you Quest big obviously, today? I'm of And precisely think you've acquisition? but just of and us our give thoughts how because now, is helpful that more your as Are is just you post kind look sustainable that done that, growth phenomenal was penetration kind been on of, has the your is, positive. perception a optimistic growth question and there curious and I Quest is guess comment

Joe Scalzo

and the both the XX:XX performance of and strong high Yes. belief We of in aspirations the had brand brand exceeded a has those.

has been the So, innovation the of singularly driver it's is that a of key the business performing recent been brand. kind outstanding, and

groups have gym brands of to user So, we that it to a it you brand probably R was bought part people's the really protein for for. focus push, purchased the for we very that saw don't really chips, know brought Core on and right, the stands and there RTD’s positioning because well. the part its most in people strong consumers performance to what brands with cookies, pipeline its recent but are expectations. has XX:XX the high bar what or most the of knows the other in qualitatively into entry just who and They the talk brand that a user. little but they the for. the lot opportunity stood understand that So, of and in on echo was that D system clear less it. Those about core outperformed online, XX:XX A infections, acquired kind the believes brands of part sharpen – history, performance growth brand, our on if farms performed the really, believed continue then strong

in communication it brand beyond brand will brand people's feel the grow the that, it strategy. brand. like innovation. just got I the think it, of our we in product a of will you we want is so on So, opportunity up, positioning that awareness early mind slow we've to around got, we execution to a to a got create positioning continue and But screw will the we we're about said don't stages grow enable the that just and We've

Eric Larson

XX:XX be Okay. might specifically, that. distribution what quick distribution, And follow-up in you just on haven't mentioned is penetration household your Quest? opportunities but of increased potentially a the part for Obviously that

Joe Scalzo

because it chips it Quest has on distribution year grew been chips, it. distribution outperformed certainly we grew grew on Well, as all penetration. on XX:XX And household

I item household a Quest, that grew, filling penetration. significantly can of case space the with directly in white snack grew tie So,

brand. white be So, about think. I been where you talking businesses important distribution only distribution falls velocity you reason per space on your really than think conservative incremental tend in it's in that to case, and less was we XX:XX and build forward The to is, I’ve item

about or So, we a its in before just standpoint. the I talk pipeline. our either see penetration performing value standpoint we like like marketplace to from incremental volume it

our see growth our XX:XX believe see will and on about like our breadth penetration in just We'll they a the to how it. I So, perform will strategy beyond we'll about brand. drive and to bars talk incrementality nice from shakes be of how depth with of an business you our it to be brands. wait consumption. expect standpoint pipeline, innovating forward. going and to our how incremental the marketplace pipeline, I key we think to core Our performs and in XX:XX have the the both ability feel We new buyers I before we to

wait and on add, see might perform. they good see both those but is and record of track Our I pretty how let's

Eric Larson

Thank comments, you Joe. Okay. your XX:XX for

Joe Scalzo

welcome. You're XX:XX

Operator

you. Thank XX:XX

of Gajrawala question the Suisse. proceed last Please day Kaumil from Our comes of with your Credit questions.

Kaumil Gajrawala

and what XX:XX everybody I has about guess Hi, for in, said me on done pricing I'll reiterate thanks squeezing those maneuvers. everybody well –

a there's could obviously, us how as idea to relates give impact mix, mix it your general margins? little the of mobility, you given you guys that there's think maybe and the on more detail you have in than effect the of rule. I impact the on a exception on margins, mix on what the have maybe there increase effect If effect will expect product is you ask I one mix margins just on mix

Todd Cunfer

Yes. XX:XX

two So, really I there's drivers. mean big

bars hit got initial – the So, COVID. COVID, during as we of last last year very year hard

margin bars highest back, we products both on come the has that as have. brands So, is

that's huge a plus. So,

probably, has piece brick I second and our and channel margins, got bit they So, COVID, on below greatly have and little is we has mix are world but obviously mortar perspective E-com mortar. impacted because not particularly e-com we're that now it's brick helped XX:XX The e-com delta you got from form more our as and brick mortar would and a a margins are perspective number, say the are well. a by I but positive, here can't been by a huge exact give of been talking our amount it's customer some been will I very think that positive impact. help and QX during and balance that went business growth from crazy. good, it's and But we'll mitigate inflation in dramatically see different. QX not of benefit. And a and to continue the us

Kaumil Gajrawala

e-commerce it share your XX:XX data from the channels what a in Okay, maybe of outside if you're in you [ph]? any channels] whatever different in [tract or great. if trends And ask I about seeing can your perspective spins and is the market are

Todd Cunfer

Yes. XX:XX

well really really, done we've So, in e-com.

share with just there, We great business e-com continues incredible. as out to feel to on the growth particularly side – player the gained have be Quest obviously there. about our the major We

years. for positive has couple share So, us the been last market very for of

Kaumil Gajrawala

Thank XX:XX great. Okay, you.

Operator

further I call back no time. comments. at closing for There like to any would to you. Joe the Scalzo Thank XX:XX this questions are turn over

Joe Scalzo

you to updating remain quarter our today's XX:XX Thanks on continue Have a look we day. for your to and good in on first safe, forward hope call. We January. participation results you

Operator

today's conclude teleconference. your XX:XX does This participation. Thank you for

this a lines Have disconnect day. great time. at your You may

The Simply Good Foods Company (SMPL) 22 Oct 212021 Q4 Earnings call transcript