Greetings. Welcome to Simply Good Foods Company’s Third Quarter Fiscal Year 2025 Earnings Call. — Operator Instructions — Please note, this conference is being recorded. At this time, I’ll turn the conference over to Joshua Levine, Vice President of Investor Relations. Joshua, you may begin.

Thank you, operator. Good morning, and welcome to The Simply Good Foods Company’s Third Quarter Fiscal Year 2025 Earnings Call for the 13-week period ended May 31, 2025. Today, Geoff Tanner, President and CEO; and Chris Bealer, CFO, will provide you with an overview of our results, which were provided in our earnings release issued earlier this morning at approximately 7:00 a.m. Eastern Time. Our prepared remarks will then be followed by a Q&A session. A copy of the release and accompanying presentation are available on the Investors section of the company’s website at www.thesimplygoodfoodscompany.com. This call is being webcast and an archive of today’s remarks will be made available. During the course of today’s call, management will make forward-looking statements, which are subject to various risks and uncertainties that may cause actual results to differ materially. The company undertakes no obligation to update these statements based on subsequent events. A detailed listing of such risks and uncertainties can be found in today’s press release and the company’s SEC filings. Note that on today’s call, we will refer to certain non-GAAP financial measures that we believe provide useful information for 1 investors. Due to the company’s asset-light high cash flow business model, we evaluate our performance on an adjusted basis as it relates to EBITDA and diluted EPS. Please refer to today’s press release for a reconciliation of our non-GAAP financial measures to their most comparable measures prepared in accordance with GAAP. The acqui- sition of Only What You Need Inc. or OWYN, was completed on June 13, 2024. Therefore, the company’s a year ago performance for the 13 weeks ended May 25, 2024, does not include results of the OWYN business. References during this call to organic or legacy Simply Good Foods refers to Simply Good Foods’ business, excluding OWYN. As we have now lapped the anniversary date of the OWYN acquisition, for future calls, the use of organic will refer to year-over-year growth for brands we have owned for more than 12 months. For Q4, that will include the growth of Simply Good Foods, excluding OWYN for the first few weeks of the quarter and growth for the entire company for the balance of the quarter. Finally, all retail takeaway data included in our discussion today, unless otherwise noted, is for the 13 weeks ended June 1, 2025, and reflects a combination of — indiscernible — and company estimates for unmeasured channels as compared to the prior year. I will now turn the call over to Geoff Tanner, President and CEO.

Thank you, Josh. Good morning, everyone, and thank you for joining us. I’ll start by reviewing our Q3 performance before turning it over to our new CFO, Chris Bealer, who will discuss our financial results and our updated fiscal year 2025 outlook. We will then be available to take your questions. Momentum continued in Q3, with net sales up 14% year-over-year, driven by the acquisition of OWYN and approximately 4% organic growth. Consumption was once again up double digits for both Quest and OWYN more than off2 setting the anticipated declines for Atkins. As a reminder, Quest and OWYN, in aggregate, make up approximately 70% of our net sales today. Growth for the Nutritional Snacking category remains robust in Q3, up double digits again reflecting the continued mainstreaming of consumer demand for high protein, low sugar and low carb food and beverage options. Simply Good is at the forefront of this generational shift with an attractive portfolio of three uniquely positioned brands powered by leading sales and marketing capabilities and a talented R&D and supply chain teams. Adjusted EBITDA in the quarter grew approximately 3% year-over-year. While our margins remained strong overall, they were under pressure during the quarter as we realized higher levels of inflation most notably from — indiscernible — As we discussed on prior calls, we expected inflation to impact our margins as we move into the second half. In response to these headwinds, we substantially stepped up our productivity and cost management efforts, and we’ve started to realize the contribution from pricing we’ve taken on selected items. We expect to realize the full benefit of productivity and pricing actions over the next 12 to 18 months. Cash flow generation remains a hallmark of this organization. In the year since we acquired OWYN, we have repaid essentially all of the $250 million we borrowed to finance the purchase. And during Q3, we repurchased over $24 million worth of our common stock. At only half a turn of leverage today, our balance sheet gives us optionality going forward. Finally, considering our top and bottom line performance year-to-date and trends to begin the fourth quarter, we are tightening our ranges for full year net sales and adjusted EBITDA. I want to commend our teams for the tenacity amidst the dynamic operating environment and delivering a year where we expect to generate approximately 3% or3 ganic growth at mid-single-digit total adjusted EBITDA growth as well as to successfully integrate OWYN. Turning to our largest brand, Quest, which represents approximately 60% of our net sales today. The brand delivered another quarter of double-digit retail takeaway in net sales growth. Consumption in Q3 grew 11% with household penetration up 120 basis points year-over-year to 18.3%. As Quest approaches $1 billion in net sales, we see a long runway of opportunity driven by a framework for growth based on disruptive innovation, expanding physical availability and increasing brand awareness. Our Salty snacks platform embodies the strategy. Salty snacks retail takeaway grew 31% this quarter and is on pace to become the largest platform on the Quest business. We continue to successfully launch exciting new flavors and sizes, expand distribution and merchandising in and out of our aisle as well as in new channels, and we remain focused on building awareness through award-winning marketing. As we work to expand physical availability of chips, we’re particularly excited about the support we’re getting from retailers to see the growth and incrementality of the segment. As an example, at a large mass merchant, Quest recently secured incremental shelf space within our core aisle during their upcoming reset later this year. In addition, at the same customer, Quest gained multiple placements outside our aisle, including on their highly visible health and wellness wall as well as the other heavily trafficked grocery section. Shifting to Bars. Consumption grew 3% this quarter, led by growth from our Hero Crispy line and our new Overload bar. Initial distribution and velocity for overload continue to build in line with that plan and both consumer and retailer feedback has been positive. The recent launch of our 45-gram Quest Milkshake is also progressing nicely, building ACV and awareness. We’re supporting this for new platform with activations across the country focused on driving trial. 4 Similar to Overload, ACV is expected to build through the rest of the calendar year. We’re also seeing solid contribution from our Bake Shop platform, which continues to be a highly incremental basket builder for us and retailers. We’re excited about the innovation we have coming on this platform in fiscal 2026. To wrap it up on Quest, we’re pleased with our Q3 performance and execution. As we enter Q4, we remain committed to driving growth and investing in the brand, positioning Quest continues its growth trajectory into fiscal ’26. Moving to Atkins. Consumption in the third quarter was down 13% versus prior year, consistent with our forecast. As we discussed last quarter, declines accelerated due to broader distribution losses at a key customer and from not repeating high-volume merchandising events from a year ago. These two drivers accounted for most of the Q3 de- cline. We’re on a journey towards a more focused and sustainable Atkins business. Importantly, the core SKUs of the Atkins portfolio performed above category velocity bench- marks. However, the brand does have a long tail of SKUs, many of which turn at below category average levels. Therefore, our approach continues to be to drive towards an optimized assortment for the brand, including bringing to market improved innovation like we’ve done with the 30-gram Atkins Strong Shake. In channels like e-commerce, where we do not have space constraints, we continue to grow nicely with retail takeaway at a key customer, up 7% this quarter. Part of the rationale in proactively printing act and shelf space is working with retailers where possible to more effectively utilize the total shelf space allocated to Simply Good Foods. As an example, during upcoming resets, we expect Atkins to see a significant decline in distribution at a large mass retailer. However, we will offset a majority of Atkins space losses with gains for Quest and OWYN SKUs that are higher turning and in the case of Quest more profitable. 5 Our commitment to supporting the brand and confidence in the long-term vitality of the business is underpinned by the strength of the core SKUs. Consumer research and customer conversations continue to reinforce its strong needs for a science-based brands and products that help consumers with their weight loss journey, including those using or coming off GLP-1 drugs. We remain committed to our revitalization plan, again, in support of building a healthier, more profitable and more sustainable business. Moving to OWYN. Retail takeaway increased 24% in Q3 with strong contribution across channels. OWYN’s ready-to-drink shakes retail takeaway grew over 20% in the quarter. Distribution increased 18%, benefiting from recent gains made during the spring reset. Reflecting on Q3 consumption growth, we fully anticipated that trends would slow relative to the first half as we were lapping some sizable wins from the prior year. As we en- ter Q4, despite a slightly slower start in June, we expect retail takeaway trends to remain strong, benefiting from incremental distribution wins as well as planned merchandising activity across several retail partners. Stepping back, we continue to see a long runway of growth for the brand due to strong velocities and category incrementality, that position OWYN to continue to expand distribution, household penetration and awareness, which remain well below peers and lever- aging Simply’s R&D team to still key portfolio gaps across flavors and sizes and even new formats. At approximately 10% of our net sales today, and with integration work nearly complete, we remain confident in our ability to drive strong double-digit growth. We have the team, capabilities and insurgent mindset to enable OWYN to contribute to Simply’s top and bottom line growth for years to come. To summarize, I’m pleased with the momentum in our business, our fiscal year-to-date performance and our outlook as we work to close the year. Simply Good is uniquely positioned as a leader in the fast-growing Nutritional Snacking category with a portfolio 6 and team built to lead the generational shift of demand towards high protein, low sugar and low-carbon food and beverage products. We will do this by introducing delicious innovation, expanding physical availability of our products and building brand awareness. With approximately 70% of our portfolio through Quest and OWYN, driving strong top and bottom line growth as well as an agile culture, flexible supply chain and a talented team, we are confident in our ability to deliver sustainable growth and create meaningful shareholder value. I will now turn the call over to Chris, who will provide you with the details of our financial results and outlook.

Thank you, Geoff. Good morning, everyone. The Simply Good Foods third quarter net sales of $381 million increased 13.8% versus last year, driven by the contribution from OWYN of $33.6 million or 10% as well as 3.8% organic growth. Organic net sales growth was driven by Quest, which grew 15% in Q3. The brand benefited mainly from strong retail takeaway as well as a modest improvement in retailer trade inventory to ensure operational continuity during a warehouse transition early in Q4. Net sales for Atkins declined 12.7% in line with consumption. And OWYN had another solid quarter with retail takeaway up double digits versus prior year. Gross profit of $138.5 million increased 3.7% from the year ago period, driven mainly by the inclusion of OWYN. Gross margin was 36.4%, a decline of 350 basis points versus prior year, driven mainly by elevated input costs, most notably — indiscernible — that were only partially mitigated by productivity and pricing. The inclusion of OWYN in our results was also a headwind in the quarter. Selling and marketing expenses of $33.8 million were down modestly versus prior year 7 with declines on the legacy business partially offset by the inclusion of OWYN to the portfolio. G&A expenses were $41.2 million, an increase of $9.7 million versus last year, pri- marily due to integration expenses and the inclusion of OWYN. Excluding stock-based compensation and onetime integration costs, G&A increased $4.8 million to $31.4 million, driven mainly by the addition of OWYN to the portfolio. As a result, adjusted EBITDA of $73.9 million increased 2.8% from the year ago period. Net interest expense of $4.2 million was up modestly versus the prior year, while the effective tax rate was 25.2%, up slightly versus last year. Net income was $41.1 million, down from $41.3 million last year. On a fiscal year-to-date basis, net sales are up 13.2%, supporting gross profit and adjusted EBITDA growth of 9.2% and 10.6%, respectively. Margins have compressed mainly as a result of the inclusion of OWYN in our results. Third quarter reported EPS was $0.40 per diluted share versus $0.41 in Q3 last year. Adjusted diluted EPS was $0.51 compared to $0.50 in the year ago period. On a fiscal year- to-date basis, the company generated reported diluted EPS of $1.14, up 4.6% versus the prior year, whereas adjusted diluted EPS of $1.46 increased 9.8% versus the comparable prior year period. I want to commend the team for their hard work and strong execution on delivering our results so far this year and their perseverance amidst a dynamic environment. Note that we calculate adjusted diluted EPS as adjusted EBITDA less interest income, interest expense and income taxes divided by diluted shares outstanding. Please refer to the press release for an explanation and reconciliation of non-GAAP financial measures. Moving to the balance sheet and cash flow. As of May 31, 2025, the company had cash of $98 million and an outstanding principal balance on its term loan of $250 million, bringing our net debt to trailing 12-month adjusted EBITDA to approximately 0.5x. Fiscal year-todate cash flow from operations was $133 million compared to approximately $167 million 8 last year. The decline was primarily due to higher uses of working capital, principally inventory. Capital expenditures were approximately $3 million. During the quarter, the company repaid $50 million of its term loan debt, bringing fiscal year-to-date repayments to $150 million. In the 11 months since we’ve acquired OWYN, the company has now repaid $240 million of the $250 million borrowed on the purchase. In addition, during the quarter, the company used $24 million to repurchase nearly 700,000 shares. The company has nearly $50 million remaining on its current share repurchase authorization. Moving on to our outlook. As you saw in this morning’s press release, we are updating the ranges of our full year net sales and adjusted EBITDA guidance. Specifically, we expect the following: total company reported net sales are expected to increase 8.5% to 9.5% with organic net sales growth driven primarily by volume. Embedded within that, we anticipate OWYN net sales to finish the year at approximately $145 million, which is the midpoint of our previously provided range. Total company adjusted EBITDA is expected to increase 4% to 5%, which continues to include an assumption that gross margins will decline 200 basis points on a full year basis. Please note that our outlook includes the 53rd week in fiscal year 2024, which represents an approximately 2 percentage point headwind to full year growth for net sales and adjusted EBITDA in fiscal year 2025. As it relates to the fourth quarter, I would like to highlight a few items. First, we expect Q4 organic net sales to grow around 3% at the midpoint, which, as a reminder, will include OWYN within the organic net sales growth calculation for most of the quarter. Second, our implied gross margin outlook for Q4 reflects an increase in realized inflation as well as the impact of tariffs, which are beginning to flow into our P&L. Please note that both of these drivers are expected to continue for some time. As Geoff said earlier, 9 we are stepping up our productivity and other mitigation efforts, but these offsets will take time to be fully realized. And third, our updated full year adjusted EBITDA growth outlook implies a low double-digit decline at the midpoint in Q4 or a mid-single-digit decline, excluding the extra week. Finally, I would note that our outlook assumes current economic conditions and consumer purchasing behavior will remain generally consistent over the balance of the company’s fiscal year. For a comprehensive summary of our full year outlook and details on certain below-the-line items, please see Slide 16 in our presentation. That concludes our prepared remarks. Thank you for your interest in our company. We are now available to take your questions.

And the first question today is from the line of Matt Smith with Stifel.

Geoff, you called out distribution expectations across the portfolio for the upcoming fall shelf reset, including what sounds like significant losses for Atkins. Can you expand on how much of a distribution headwind you expect for the brand and product segments? And how you expect that to impact sales through the channel? Kind of help bridge the comments between significant distribution loss against consolidating distribution behind the hardest working SKUs.

Yes. Thanks, Matt. I appreciate the question. So the double-digit declines on Atkins that 10 we’re seeing right now, obviously, a headwind to total company growth. I do want to credit the team, though, for proactively addressing it head on with retailers and with our revitalization efforts. As we approach the full reset conversations with buyers, we had very productive conversations with them about the best use of space for the category and for Simply. And those conversations acknowledge that Atkins has a strong core of SKUs, but certainly a long tail of lower velocity SKUs. So in conversations with those retailers, the net result is that we’re expecting additional cuts for Atkins that we do expect to offset with gains from Quest and OWYN. So while we’re early in our planning cycle for ’26, but more specifically to your question, we do expect to see continued double-digit declines on the Atkins business in ’26, driven almost entirely by these distribution cuts. But again, it’s part of our strategy with Atkins to build a more sustainable, more profitable and more efficient business. And if you step back a little bit, as I mentioned, the core of the Atkins portfolio, representing the majority of sales turn above category benchmarks. And so primarily, what we’re dealing with Atkins is a space issue. And I would point to e-commerce where there is no space constraint – no space constraints, and the business is up high single digits. So I think this underscores the health of the Atkins brand, the job it does for consumers that we’re being eyes wide open and realistic about the space challenge and having very productive conversations with retailers about how to offset those challenges with gains with Quest and OWYN.

That’s very helpful. And as a follow-up, you talked about still expecting double-digit declines on Atkins as you look out to fiscal ’26. I think there was an aspiration to – for the total company to grow towards its long-term algorithm, call it, 4% to 6%. Can you – are your expectations for Quest and OWYN such that you think that’s still reasonable? Or do 11 you think the Atkins decline at this point is a little above what you had previously expected as you look out to next year?

Yes, Matt, it’s Chris. I’ll take that question. Look, it’s still very early in our planning process, and we’ll give obviously a full guide in October. What I can say on the top line, look, we’ll expect to see similar consumption trends on Quest and OWYN as we’ve seen in recent times. We do expect Atkins trends to get slightly worse than ’25, as Geoff just said. So I think we’d still be looking at growth. But like Geoff said, Atkins would definitely be a slight headwind to total company growth.

Matt, when you strip out the merchandising cuts and distribution losses on Atkins, brands actually performing essentially flat. And even in a large club customer where we’ve lost distribution, we’ve been clear about that. We were growing slightly. It’s just that the space constraints, particularly in that limited SKU environment have led us to losing on Atkins. And again, even if you look at e-commerce, where there’s no space constraints, we’re growing. So our plan moving forward with the business with Atkins into ’26 is to proactively address those challenges with retailers. And obviously, that will flow through into ’26 with Atkins.

The next question is from the line of Peter Grom with UBS.

I wanted to ask on OWYN, a bit of a slowdown in the track data, and I think it was a bit weaker than we had modeled in the quarter. So would just love some perspective on how the brand is performing relative to your expectations? Was this slowdown largely contemplated as you think about the guidance? And then, Chris, I just wanted to make 12 sure I understand your response to Matt’s question. I think you said you would expect growth similar to what we’ve seen recently. So can you maybe put some guardrails in terms of what that might mean for OWYN as we think about fiscal ’26?

Yes, I’ll take the first question and then hand it off to Chris. We remain very confident in the OWYN business and believe it has a very long runway of sustained growth. To your question, we fully anticipated the deceleration in the second half. It was always in our plans and reflected in our guidance. And the key driver here, I’ve said before, is we lapped significant TDP gains, particularly at a large club and mass customer. And given where the brand is in its maturity curve, though, we’re very confident that distribution gains are going to reaccelerate. As we look into Q4, we have very clear line of sight to those gains coming over the summer and into the fall in Q3 was just we were lapping a period when we didn’t – while we were lapping a sustained period of distribution growth from last year. I would highlight that OWYN’s ACV today is in the low 60s which is about 20 to 30 points below leading readyto-drink peers. So it has significant opportunity to add more breadth on shelf. And in customer conversations, they’re very bullish on this brand, and we will be seeing in a meaningful gains starting in the summer and into the fall. And even looking beyond that, I’m excited about additional platform innovation that should keep that distribution engine going. I’ll turn it over to Chris for second question.

Yes. And then maybe just to clarify, what I was saying is if you look at Quest and OWYN, recent consumption trends, we expect those to continue into FY ’26. So just to specify 13 a couple of points on OWYN in Q3, we had, let’s call it, 24% – roughly 24% consumption growth. We’d expect something similar to that in FY ’26 on a full year basis. And what that’s going to do – as you think about the portfolio, what that’s going to do is it’s going to continue mixing Quest and OWYN larger in the portfolio and Atkins smaller in the portfolio given the numbers that Geoff has already laid out earlier.

Okay. That’s really helpful. And I guess my second question just is on the 4Q exit rate and how we should be thinking about that in the context of ’26. And you kind of called out top line 3% at the midpoint. It’s a little bit below the long-term algo, profit down mid-single digits, excluding the extra week. And as mentioned, these costs are going to continue with maybe the offset likely to take some time. So I know you’re still early in the planning process here, but just any thoughts in terms of how we should be thinking about or how this exit rate should inform our view on the path forward?

I wouldn’t think too much about the exit rate. I would really say that it is a bit too early to give guidance on EBITDA. We’ll do that in October. We’ve got a lot of moving parts. So we’re still waiting, like everyone else for clarity on tariffs which you know – as you know, and as we’ve seen this week, that continues to shift. We generally do have good visibility to our input costs through the end of the calendar year, and we’re working to build coverage through more of fiscal ’26. We’re also working to quantify the benefits and timing of our productivity program that we talked about in the script and on pricing actions. What I can say on EBITDA is while we’re working to land the plan, we can see already that the shape of the year is going to be more challenged in the first half than the second half as we get the higher cost into our base and the benefits of productivity and other mitigants will build as they are slightly on 14 the lag.

Yes. And I just want to build up to that. We are still early in our planning cycle. I do want to remind the strength of the category 17 quarters now of high single, low doubledigit growth. The generational shift towards high protein, low carb sugar is not slowing down. It’s accelerating. When you look at our portfolio through Quest and OWYN, that represents 70% of our net sales, growing very nicely double digit. And both brands have a significant runway. When you look at the top line for us, the primary issue that we’re working through is act in space and losing some of the tail, which was to Matt’s question. And if you just go one click lower, I really would point to Quest, which continues to put up high single, low double digits week-to-week, underpinned by a Salty business that is on pace to be our largest segment. And then if you look more broadly across Quest, every part of the portfolio is growing. So we’re early in the cycle. There are some headwinds we’re working through, but I do want to remind that the fundamentals of our category and of our business remain very strong.

The next question is come from the line of Jim Salera with Stephens.

I wanted to start and see if you guys could give us an update just on the number of average SKUs Quest has across retail and particularly with kind of a focus on as you continue to expand the portfolio and salty becomes a bigger mix, what should we think about as being kind of a target or a goal number of SKUs? As I imagine, if you’re getting into other 15 placements outside of kind of your traditional aisles, that should probably increase the overall number of placements you have. So just any thoughts on that to start off?

I don’t really think about a brand having a target number of SKUs, particularly in the case of Quest, which has proven its ability to expand well beyond the core bar. I would point that there’s very few brands that I’ve seen in my career that can do that. I see continued distribution growth in our aisle on Quest, particularly on Salty. Despite the size of the Salty business for Quest, it’s clear we’re still in the very early innings on Salty. And every new flavor that we’ve brought to market under Salty has been highly incremental. I think that reflects the size of the addressable market, which is $50 billion and Quest is the disruptor in that space and clear market leader. And that – and then you have to imagine we’re working on additional forms of Salty that will continue to drive distribution. So I don’t so much have a target number of SKUs. I think the addressable market on Salty is significant. We’re going after it. What I would then go to is we’re making a concentrated effort to drive distribution out of our aisle. So historically, Simply was more focused on our aisle. But as we see the demand for highprotein, low-carb sugar mainstream, there’s clearly an opportunity for us to drive greater physical availability outside of our aisle. And we’ve made that a key priority and focus for the organization moving forward. I’ve made a lot of investments in that area that I expect to pay off in ’26 and beyond, whether that be secondary placement in mainline aisles where we have some tests going on, whether that be additional merchandising around the store or whether it be in new channels such as away from home in places we’re not today. So I don’t really view it as Quest having a particular target per se, just meeting the demand that’s clearly there for the business, both in our aisle and across the store and beyond. 16

Okay. Well, I appreciate the thoughts there. And then, Chris, if I could ask a question on gross margin. If you’re able to kind of quantify – I know we have the cocoa headwinds, but you mentioned tariffs starting to flow through the P&L. On a go-forward basis and just as we think about where ’26 might land, is it fair to assume kind of gross margin more in the range of 36% to 37% versus kind of the upper 30% if we still assume kind of tariff impact is around where it’s at today?

Yes, good question. I’m not going to specifically talk about a specific range on gross margin. Like I said earlier, that one of the – we’ve got good visibility to our cost in the first – for the rest of this calendar year, we’re looking to lock in some more coverage and to get better visibility to the second half of the year. We’ve also got a moving – a lot of moving pieces on tariffs that frankly, we don’t have a lot of clarity on given the recent extension, second extension of the tariff deadline. And like I said, the second half gross margin challenges we had this year, we’re going to see those flowing into the first half, as I talked about earlier. We do expect to have a better gross margin picture in the second half of FY ’26 as the high costs get into our base and the productivity and pricing benefits build, as I said earlier on.

Yes. Our target as a company continues to be high 30% gross margin, ideally higher. And that’s something that we remain very committed to. Obviously, that will cycle up and cycle down over time. But it’s something that we believe is extremely important because that gross margin is where we fuel our investments in innovation and brand building. Obviously, with the higher cocoa costs in particular and a little bit tariffs, we’re seeing that come under pressure right now. As Chris said, that will flow through into the second half. 17 But this is also why we’ve materially stepped up our productivity efforts as an offset and why we’re – we’ve executed some pricing. And right now, we’re contemplating additional pricing where it makes sense. So we remain very committed to getting those gross margins back up. And as we think about ’26, probably a lag to that, but that’s just a fundamental tenet to our company and how we create value and build brands.

The next question is from the line of Kaumil Gajrawala with Jefferies.

One just, I guess, a quick clarification and then a question on Quest, which is on the clarification, is Atkins double-digit declines next year just as simple as the distribution cuts sort of lapping over the course of next year? Or do you think on a sort of distribution adjusted, the brand is also declining? I think you said for so far, it’s – at the moment, it’s flat. Just curious on that comment. And then on Quest, sort of the real question is, as you talked about capacity expansion. If you can maybe just dig into that a little bit, how much, how fast is that maybe the biggest limiting factor for growth at Quest? And then the commentary on entering other parts of the store, where is it going? So outside of its own aisle, but what are the sort of target locations?

Yes. So to your first question on – I think your question is really the fundamental health of Atkins. I think it was Matt’s question, follow-up. When you strip out distribution losses and merchandising cuts, Atkins is offensively flat. And again, that underscores two things. One, the health of the brand, the consumer demand for a brand that helps them with weight wellness, how trusted the brand is and how the credibility that Atkins has in that space. But we were obviously acknowledging that Atkins has a large footprint and it has a 18 tail of SKUs that turn below category averages and that we’re proactively working with retailers to rebalance that across the Simply portfolio, but that will lead to Atkins continuing to have distribution cuts. To your question on Quest and Salty, we continue to be, as I said, very encouraged by the growth we’re seeing on Salty week-to-week, it’s 25% to 30% consumption growth week in, week out. We continue to be very encouraged by the support we’re getting from retailers with additional merchandising I called out in the script, a large mass customer on the wall of wellness. We’ve got a test going on with a dedicated section in our aisle, and we’ve got additional display around the store. And that has necessitated us to pull forward our capacity planning because we see no sign of the business slowing down, and we want to make sure that we are ahead of this and that we can service the market and service consumers with our products for years to come. So that we want to get ahead of that. And then I think you asked about where we’re driving additional distribution. So the key elements of that are, firstly, in channels where we’re not. So we’ve been transparent about a very important test that we ran at a large club customer where we did very well. We’re in conversations about expanding on that as we move into ’26. We’ve got some tests going on in the mainline Salty aisle that we’re very encouraged about. And then on top of that, a big focus for me is putting our products within on reach of consumers around the store. So we’ve amped up our retail execution capabilities, just getting secondary placements as well as away from home. So when you think about Quest, increased physical availability is a significant growth vector for us in the coming years. We’re very focused on driving that. So yes, winning in our aisle, but driving availability at Quest everywhere. 19

The next question comes from the line of Robert Moskow with TD Cowen.

Geoff, I was wondering if you have any color for us on the fight for distribution space in the ready-to-drink protein shake category. I would imagine more new entrants are coming in, more capacity is being built. How has that influenced your ability to get your new Quest Shake on the shelf? And do you foresee any change in the fight for shelf space going forward?

Yes. Look, it’s not a surprise to me that we’re seeing stepped-up levels of competition in the ready-to-drink space. I think that’s a reflection of the state of the center store. It’s a reflection of the strength of our category, which, as I mentioned, now 17 quarters of double-digit growth. So particularly in ready-to-drink, which is seeing outsized growth even within Nutritional Snacking. It’s not a surprise to me that there’s been some recent entrants. So far, when it comes to Quest beverage, we’ve been very pleased with our ability to gain distribution. Right now, we’re in the early innings of that launch, where our ACV is of around about 22%, 23% that will build as we get into the 4 resets. So we’ve been able to secure great distribution, not just within our aisle, but more broadly, targeting coolers, for example, where I’ve been very pleased and it’s leveraging the new capabilities we put in place to drive distribution out of our aisle. What that reflects is that we’ve got a 45-gram protein shake that is performing early, but performing very well. So people obviously trust the brand, putting a lot of support behind it. It’s a competitive space. I want to be cautious with our projections for this business. However, early in 3, 4 months into the launch here, despite the competitive environment, which you ref20 erenced, I’m pretty optimistic about what I’m seeing out of this milk shake launch and increasingly optimistic about what a sizable beverage business could mean for the Quest business.

Can you be more specific? Do you think it will get into club stores, the new Quest item? Or is it focused on different channels initially?

It’s a little early. I mean ideally, Rob, would want to build the business outside of club before taking in the $30, $40 price point to club, typically how you want to launch a new product like this. If we have the ability to test in club, we might do that. But as we think about getting to market, particularly with the higher price point that this product has, ideally, we want singles distribution, some 4 packs. We build the business, we would then take it to the club environment where you’re talking 12 to 15 packs. That’s typically how I would want to bring a product like this to market.

Our next question is from the line of Jon Andersen with William Blair.

I have a 2-parter. You’ve talked about pricing that you’ve executed some and are considering more across the portfolio. Can you provide a little bit more color around the pricing you’ve implemented to date and how you’re thinking about that going forward? And then I wanted to kind of shift gears and ask about capital allocation priorities. You paid down some debt and bought back some stock in the quarter. Leverage ratio is in great shape, well below a turn. How are you thinking about where you want to apply capital going forward to best use? 21

Yes. I’ll take the price question. I’ll turn it over to Chris for the capital allocation. So we did take pricing recently on our Atkins Shakes business, reflecting higher input costs. So that’s been in market now for over a quarter. And to your point, we are evaluating additional pricing as we see cocoa remain somewhat stubbornly high, and we are looking at the tariffs, as Chris said, TDP ultimately on where that lands. But it’s – we need to – as I mentioned earlier, when we talked about gross margin, we need to recover our costs to support our gross margin that enables us to support investment in our business. So we are unsurprisingly evaluating pricing more broadly across the portfolio. Exactly how the levers you could look at price increases or trade reductions, but we’re right now in the middle of figuring out how best to go execute that as we look at input costs remain stubbornly high. So I’ll turn it over to Chris for capital allocation.

Thanks for the question, Jon. So look, as you said, cash generation for this business is very strong. And yes, our net debt is down to 0.5. Our cash and capital allocation priorities have not changed. So we are constantly evaluating best ways of using excess cash, we use a structured framework. Our main use of cash that is in excess of our operations, our main use is M&A, and we do see some interesting M&A things in the pipeline. Second priority would be debt pay down. Obviously, we’ve said on the call that we’ve paid down now to about $250 million, and we’re pretty happy with that debt level. And then the last or the third capital use is going to be on buybacks if it makes sense and when it makes sense. But as we’ve said before, we’re a high-margin asset-light model. We do convert a lot of annual EBITDA to cash. And as we said on the call, we have about $100 million of cash today. And we talked again on the call about things we used that cash for 22 over the last sort of the last 12 months. But yes, priorities would be, number one, M&A; number two, debt paydown; and then lastly, any buybacks.

That’s helpful. Can I squeeze in one more? I apologize. I know you’re not ready to comment specifically on 2026, but you have said that you’re running 70% of the business now in the 2 high-growth brands, Quest and OWYN, you expect those to kind of continue to grow consumption in the double-digit range or better. And then a bit of a drag from Atkins kind of carrying over into fiscal ’26. It seems if you kind of do the math, you could still see top line growth at algorithm next year. Is that a fair assessment? Or do you think that the drag from Atkins is a little bit bigger than initially anticipated?

Yes. No, I just want to reiterate, we’re early in the cycle for ’26 as we build the plan, both on the top and bottom line. To your point, we’ve got 70% of the portfolio growing double digit, which is very encouraging in the category that 17 quarters of double-digit growth. With that being said, Atkins is it will be a drag as we go into ’26, and we’re just working through exactly how that is going to mix through. What I would point out, and Chris referenced this earlier, as you go through ’26 and even looking further ahead, Atkins does start to mix down very materially in the portfolio. And then that obviously has an inflection implications on total company. But ’26 will be a year where we will have to address the Atkins distribution headwind.

The next question comes from the line of Alexia Howard with Bernstein.

Can I ask a slightly different question around the legislation that’s just been passed in Texas requiring warning labels to go on to foods containing 44 additives by 2027. I’m just 23 curious about how much of your portfolio might be affected, whether you can take steps over the next 18 months to actually eliminate a lot of those additives? Is that going to be a major challenge for you? And which specific ingredients might be most challenging? What we’ve heard from others is that things like preservatives and antioxidants are actually much more challenging because of shelf life than the original list of artificial dyes that have been wondering around the media for the last few months.

Yes. Alexia, I appreciate the question. I’d say at a high level, we feel much better insulated than many of our large-cap food peers as it relates to food regulations that’s obviously underpinned by our category and our product, high protein, low in sugar, low in carbs. We don’t have the profile of many other categories and products that where these regulations are centered on. We’ve obviously assessed our portfolio as we look at where some of the regulations are going. And what I would say is that the current impact to our portfolio is very small. There are a few SKUs that will probably have to do some reformulation, but nothing material and nothing that we can’t execute, and I wouldn’t anticipate any material cost implications from that. I think that’s a reflection of the strength of our R&D team as well. And then where I reminded the recent acquisition of OWYN, only what you need clean label plant-based avoid the top 9 allergen, not just safe but extremely well positioned against this shift. And that’s something that we’re going to continue to focus on with the brand as we turn on marketing and we continue expanding that brand into additional platforms. So not really an issue for us, Alexia. As a general statement, our products are on the right side of this. In particular, OWYN, we’re going to really run hard with this trend on that brand.

24 The next question is from the line of Brian Holland with D.A. Davidson.

Quest protein bars have seen a nice inflection here relative to the past few quarters. Obviously, you had the Overload rollout, which I presume has some, if not all, of the contribution there. But just kind of curious what you’re hearing, seeing with respect to the response to that launch, how it informs sort of your go forward in what is still your biggest category under that Quest banner today? And maybe just some sense of what the innovation pipeline, how that’s forming for that specific line?

Yes. No, I’m very pleased with returning our Bar business to growth, which has been a key focus of mine organization. over the last year. We’ve seen growth plus 3 consumption in the last 13 weeks versus flat in Q2. The two drivers that we mentioned in the script are the continued growth of our Crispy or Heroline. I think the new news is overload. We’re in the early innings of Overload, but I’ll remind is the ACV on overload just because of the timing of the resets, we’re still in the low 20s on ACV that will build moving forward. But where we have overload in distribution, it is performing extremely well. And I always look to the same-store channel as a little bit of a barometer on bars. And Overload Bars have risen to some of the top turning SKUs in all of our Bar portfolio. And if you look at the reviews on Amazon, 4.6 was the last time I checked it, which is one of the highest reviews we’ve ever had. I think what that is a reminder is that there’s no such thing as a mature category or business if you continue to bring disruptive innovation. And so you’re seeing the category and now our business respond to when we bring out great innovation. And I would think I’ve been transparent over the last year or so that we kind of took our foot off the gas a little bit on Bar innovation, both on Quest and Atkins. And that has been a big focus moving forward is to reignite our Bar innovation, bring 25 exciting new forms and flavors to market. I obviously see the pipeline on the business, and it is now very, very exciting to me. And the performance of Overload is just a proof point that when we bring great innovation to market, the business responds, and we’re going to continue to do that.

The next question is from the line of John Baumgartner with Mizuho.

Geoff, I wanted to come back to Atkins. You mentioned the strength of the core SKUs. And I’m curious if you could speak to innovation for the brand going forward. This class of 24 that launched back in August, the truffles, the gummy bears, those are nicely accretive to sales. Would you consider those types of products include them on the core at this point? Have they proven themselves? And how aggressive do you plan on being with innovation at Atkins moving forward?

Yes. Thanks for the question, John. Yes, innovation is just fundamental to doing well in this category. And as I mentioned in the last question, we had fallen off innovation. I’ve been very candid, have been transparent about that. We dropped the ball on bringing great innovation, particularly on the Bar business and in our core. So we have ramped up those efforts. I’m thrilled about the pipeline, not just on Quest, but on Atkins and OWYN. To drill down more specifically to your question, the 30-gram Atkins Strong platform that we brought to market is doing very well, has really helped drive the growth of the ready-to-drink portfolio. The confection innovation that you referenced, some of it’s doing well and some of it isn’t, and that’s pretty part the course. The focus for us, the next wave of focus 26 is going to be on Bar and bringing more innovative, more disruptive innovation to Atkins. So innovation is critical. It’s the lifeblood of the category, it’s going to offer it where we have turned it back on, it’s helping drive the business. On Atkins, in particular, the next wave of it has to be on that.

At this time, we’ve reached the end of the question-and-answer session. I’ll turn the call over to Geoff Tanner for closing remarks.

I just want to thank everyone for joining the call, and we look forward to seeing you on October.

This will conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day. Copyright © 2025, S&P Global Market Intelligence. All rights reserved 27