In a remarkable move, The Simply Good Foods Company (Nasdaq: SMPL), a pioneer in branded nutritional foods and snacking products, has officially acquired Only What You Need (OWYN). OWYN, a leading brand in plant-based RTD protein shakes, joins Simply Good Foods’ portfolio. This acquisition marks a significant stride in the company’s mission to mainstream nutritious snacking.
Simply Good Foods announced the acquisition on April 29, 2024, finalizing it with a $280 million purchase price. This strategic move diversifies Simply Good Foods’ product offerings and enhances its presence in the growing RTD protein shake market.
OWYN: A Rising Star in the RTD Market
OWYN’s rise in the RTD protein shake market has been rapid. Known for its plant-based, allergen-friendly, and nutritionally robust shakes, OWYN has captured the hearts of health-conscious consumers seeking convenient, high-protein options. The brand’s fast growth and popularity made it an attractive acquisition for Simply Good Foods.
“The acquisition of OWYN represents a significant strategic win for Simply Good Foods. It introduces a third complementary brand and opens the door to a new consumer segment. This significantly strengthens our position in the expanding RTD shake market,” said Geoff Tanner, President and CEO of Simply Good Foods. He emphasized that it solidifies their leading position with retail partners. Tanner’s excitement was palpable as he outlined the company’s vision for the future. In this vision, OWYN’s innovative products play a central role.
A Vision for the Future
Simply Good Foods’ acquisition of OWYN is not just about adding a new brand to its portfolio. It’s about transforming the company’s approach to the nutritional snacking market. The integration of OWYN is expected to drive profitable growth. This growth will be achieved through enhanced distribution channels, increased household penetration, and a more cost-efficient supply chain.
Tanner emphasized the company’s strategic approach: “We are confident our market strategies will drive profitable growth. These strategies include enhanced distribution, greater household penetration, and a cost-efficient supply chain. We also plan to lean on the expertise of our combined R&D teams to improve product performance and explore new areas for innovation.”
This forward-thinking approach highlights Simply Good Foods’ commitment to continuous improvement and innovation. By leveraging the combined expertise of its research and development teams, the company aims to enhance OWYN’s already impressive product line and introduce new offerings that meet the evolving needs of consumers.
Financial Framework and Growth Projections
The financial details of the acquisition shed light on Simply Good Foods’ strategic planning and growth projections. The $280 million purchase price was funded through a combination of cash on hand and incremental borrowings under the company’s existing credit facility. This includes an incremental $250 million term loan and an outstanding $240 million term loan balance, with favourable interest rates.
Simply Good Foods has set ambitious targets for the future. The company aims to pay down a portion of its $490 million total term loan debt during the balance of fiscal year 2024, targeting a net debt to Adjusted EBITDA ratio of approximately 1.25x by fiscal year-end August 2024. This prudent financial management underscores the company’s commitment to maintaining a strong balance sheet while pursuing strategic growth opportunities.
OWYN’s Market Potential
OWYN’s market potential is vast, and Simply Good Foods is poised to capitalize on this opportunity. Mark Olivieri, Senior Vice President and General Manager of OWYN expressed optimism about the brand’s future. “We expect that in calendar year 2024 OWYN will achieve net sales of approximately $120 million. We are building on strong relationships with major customers in both traditional and natural markets. Also have a thriving, profitable, and expanding eCommerce business,” Olivieri said.
This positive outlook is supported by OWYN’s impressive track record of growth and its strong market presence. The brand’s focus on high-quality, plant-based protein shakes that cater to a wide range of dietary needs has resonated with consumers, driving sales and brand loyalty.
A Strategic Fit
The acquisition of OWYN is a strategic fit for Simply Good Foods in several ways. Firstly, it aligns with the company’s mission to lead the nutritious snacking movement. OWYN’s plant-based shakes complement Simply Good Foods’ existing product lines under the Atkins™ and Quest™ brands, offering a broader range of options to health-conscious consumers.
Secondly, the acquisition opens up new consumer segments for Simply Good Foods. As more people adopt plant-based diets and seek allergen-friendly options, OWYN’s products are well-positioned to meet these demands. This diversification strengthens Simply Good Foods’ market position and enhances its ability to respond to changing consumer preferences.
Innovation and Product Development
Innovation drives Simply Good Foods’ strategy. They’ll use R&D expertise to enhance OWYN’s products and innovate. This approach aims for significant product improvements and new, consumer-focused innovations.
Tanner emphasized, “We’ll leverage R&D for product improvement and innovation.” This focus highlights Simply Good Foods’ commitment to leading in nutritious snacking.
Consumer Engagement and Market Expansion
Simply Good Foods commits to building strong relationships with its customers and expanding its market reach. The company enhances distribution channels, increases household penetration, and expands its presence in both traditional and natural markets. This multi-faceted approach drives growth and ensures that OWYN’s products are widely available to consumers.
Financial Health and Strategic Investments
Maintaining financial health is a top priority for Simply Good Foods. The company’s prudent financial management and strategic investments support its growth objectives while ensuring long-term stability. Simply Good Foods carefully manages its debt and targets a net debt to Adjusted EBITDA ratio of approximately 1.25x by fiscal year-end August 2024, positioning itself well to achieve its financial goals.
About The Simply Good Foods
Headquartered in Denver, CO, The Simply Good Foods Company (Nasdaq: SMPL) is a consumer-packaged food and beverage company focused on bringing nutritious snacking to the mainstream market. Simply Good Foods’ portfolio includes protein bars, RTD shakes, sweet and salty snacks, and confectionery products under the Atkins™, Quest™, and OWYN™ brands. The company commits to leading the nutritious snacking movement through innovation, organic growth, and strategic investments.
Forward-Looking Statements and Financial Projections
We caution investors not to place undue reliance on these forward-looking statements, as they reflect the company’s views as of the date of this article and are subject to change.
Simply Good Foods uses non-GAAP financial measures such as Adjusted EBITDA and net debt to Adjusted EBITDA ratio to supplement its financial information. We provide these measures to offer additional insight into the company’s performance, as investors and analysts in the industry commonly use them. However, do not consider them in isolation or as substitutes for GAAP measures.
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Conclusion
The acquisition of OWYN by Simply Good Foods marks a pivotal moment for the company as it continues to expand its footprint in the nutritious snacking market.
By integrating OWYN’s plant-based RTD protein shakes into its product lineup, Simply Good Foods aims to capture a larger share of the growing market and drive sustainable, profitable growth. Additionally, with a strong focus on innovation and strategic growth, Simply Good Foods positions itself to lead the nutritious snacking movement and deliver value to its shareholders and consumers alike.
For more information about The Simply Good Foods Company and its product offerings, please visit SimplyGoodFoodsCompany.com.
