Simply Good Foods Reports 10.4% Revenue Growth Driven by OWYN Acquisition

The Simply Good Foods Company reported a notable increase in financial performance for the thirteen weeks ended November 30, 2024, with net sales reaching $341.3 million, up from $308.7 million in the same period last year, marking a 10.4% increase. This growth was primarily driven by the acquisition of Only What You Need, Inc. (OWYN), which contributed $32.3 million in net sales. Gross profit also improved, rising to $130.5 million, or 38.2% of net sales, compared to 37.3% in the prior year, attributed to lower ingredient and packaging costs.

Operating expenses increased by 19.8% to $75.9 million, largely due to a significant rise in general and administrative costs, which surged by 41.2% to $38.1 million. This increase was primarily linked to integration costs associated with the OWYN acquisition and higher employee-related expenses. Despite the rise in operating expenses, income from operations grew to $54.6 million, reflecting a slight increase from $51.8 million in the previous year. Net income for the period was $38.1 million, up from $35.6 million, benefiting from the higher gross profit and a decrease in income tax expense.

The OWYN acquisition, completed on June 13, 2024, for approximately $281.9 million, is a strategic move aimed at expanding Simply Good Foods' portfolio in the nutritious snacking market. The company plans to leverage OWYN's plant-based product offerings to attract a broader consumer base. The acquisition was financed through a combination of cash and incremental borrowings under the company's existing credit facilities, which now total $350 million in long-term debt.

In terms of operational metrics, Simply Good Foods reported a decrease in cash provided by operating activities, which fell to $32.0 million from $47.5 million year-over-year. This decline was primarily due to changes in working capital, including increased inventory levels. The company maintained a cash balance of $121.8 million as of November 30, 2024, and continues to comply with all covenants under its credit agreement.

Looking ahead, Simply Good Foods anticipates continued growth driven by organic sales, supported by strong marketing initiatives and product innovation. The company is focused on enhancing its operational efficiencies and integrating OWYN into its existing business framework. Management remains optimistic about navigating market conditions and leveraging its expanded product offerings to capture a larger share of the nutritional snacking market.