Simply Good Foods: ‘Mainstreaming of Consumer Demand for High Protein’ Boosts Q2 Earnings

In its second quarterly earnings report since acquiring OWYN, The Simply Good Foods Company (SGFC) posted double-digit net sales gains fueled, in part, by the “mainstreaming of consumer demand” for high-protein, low-sugar, low-carb foods and beverages.

“With a diversified portfolio of three uniquely positioned brands aligned with these consumer megatrends, we believe Simply Good is well-positioned to lead this generational shift,” said president and CEO Geoff Tanner during this morning’s earnings call.

In the second quarter ending March 1, the company saw net sales climb 15.2% year-over-year to $359.7 million. OWYN net sales contributed $33.8 million, or 10.8%, to the growth. Net income rose from $33.1 million to $36.7 million.

Adjusted EBITDA grew 18% year-over-year to $68 million, reflecting favorable commodities and strong cost discipline.

Across all three brands, SGFC’s retail takeaway increased approximately 7%, driven by strong Quest and OWYN point-of-sales growth of roughly 13% and 52%, respectively. However, Atkins’ individual retail takeaway dropped 10%.

At roughly 30% of the company’s net sales, Tanner said the current Atkins trends are a “meaningful drag on growth.” As such, SGFC’s near-term goal is to right-size investment levels on the brand “in support of building a sustainable, healthy business.” The decisions are expected to create short- to medium-term headwinds, including declines due to lapping significant low-ROI merchandising from last year.

Based on internal research, SGFC also sees ample opportunity in positioning Atkins as an ally to consumers using or coming off GLP-1 weight loss drugs. The company will support the brand with new innovations, new packaging, a new website and new advertising that builds on the recently-introduced Atkins Strong platform.

Meanwhile, SGFC views OWYN – which it acquired in June – as “one of those rare gems” that can grow velocity and distribution in parallel, according to Tanner. During the quarter, the brand saw RTD shake sales grow 53% and distribution increase 22%, expanding into new doors while adding more SKUs to existing retailers.

Despite OWYN’s single-digit household penetration and awareness levels, the brand’s velocities in MULO channels today are “already among the industry leaders in its 4-pack sub-segment,” Tanner claims.

Quest, which accounts for approximately 60% of the company’s sales, is approaching $1 billion in net sales, and executives “continue to see a long runway of growth” led by three key drivers:

innovation, availability and brand awareness. In Q2, the brand saw continued broad-based growth from its salty snacks platform, which was up 45%. Growth was attributable to the doubling of SGFC’s manufacturing capacity last fall that supported strong customer service and merchandising levels.

In the quarter, Quest completed a national test with an undisclosed club customer, which gave SGFC a nearly three-point benefit to its consumption growth. The brand also saw continued success of its Bakeshop platform, which has been incremental to the category.

Based on its Q2 results, SGFC has reaffirmed its fiscal 2025 outlook. The company expects net sales to increase 8.5% to 10.5% and adjusted EBITDA to grow 4% to 6%.

Despite looming tariffs and inflationary headwinds, Tanner expressed confidence in the brand’s future, stating, “Simply Good is uniquely positioned as the leader in the fast-growing nutritional snacking category. Obviously, it’s a dynamic time with a lot of uncertainty and pressure on consumer sentiment. But with that said, by far the majority of our products are made and sold in the U.S.”

During today’s earnings call, the company also announced the appointment of Christopher Bealer as SVP of Finance, effective April 1. Bealer, who came to SGFC from personal care manufacturer Reckitt, is expected to succeed CFO Shaun Mara upon his retirement in July.

“Chris brings almost 23 years of experience in CPG and consumer durables in North America and global markets. And, like Shaun, has extensive financial, strategic, and operating experience,” said Tanner.