The Simply Good Foods Company · NASDAQ:SMPL
The Simply Good Foods — CAGNY 2017
38 slides from The Simply Good Foods's conference presentation, Nov 16, 2017
Slide 1: CAGNY Presentation
CAGNY PRESENTATION NOVEMBER 16, 2017 0 0
Slide 2: Disclaimer
Disclaimer Forward Looking Statements This presentation contains statements that are not historical facts but that may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can generally be identified by the use
Slide 3: Company Attendees
Company Attendees BOARD OF DIRECTORS Jim Kilts Dave West Brian Ratzan Chairman Executive Vice Chairman Director MANAGEMENT Joe Scalzo Todd Cunfer Chief Executive Officer Chief Financial Officer 2
Slide 4: Dave West
Dave West Executive Vice Chairman Joined Centerview Capital as a partner in 2016 Former CEO and President of Big Heart Pet Brands (fka Del Monte Corporation) Former CEO and President of The Hershey Company Previous senior management positions at Nabisco and Kraft Foods 3
Slide 5: Company Overview
Company Overview Simply Good Foods Company By merging with Atkins, Conyers Park Acquisition Corp became the Simply Good Foods Company on July 7th Conyers Park Acquisition Corp was a Special Purpose Acquisition Corporation that raised over $400 million last July Executive founders Jim Kilts and
Slide 6: Jim Kilts
Jim Kilts Chairman Founded Centerview Capital in 2006 Former Vice Chairman of Procter & Gamble Former Chairman, CEO and President of The Gillette Company Former CEO and President of Nabisco Former head of Kraft Foods and General Foods (Worldwide Food Group at Philip Morris) 5
Slide 7: Why We Like the Business
Why We Like the Business Unique Consumer Idea Atkins defines “low carb”, “low sugar”, “protein rich” nutrition Loyal, growing consumer base underpins strong consistent growth “Hidden sugars” is an emerging breakthrough concept Advantaged Business Model $600mm scale brand at retail Premium-
Slide 8: Joe Scalzo
Joe Scalzo Chief Executive Officer • Joined Atkins Nutritionals in 2013 • Formerly President and COO of Dean Foods (led transformation of WhiteWave) • Previous senior management positions at The Gillette Company, Coca-Cola and P&G 7
Slide 9: Agenda
AGENDA BUSINESS OVERVIEW GROWTH STRATEGY FINANCIAL OVERVIEW 8
Slide 10: Business Overview
BUSINESS OVERVIEW Simply yGood
Slide 11: Atkins Brand Evolution
Atkins Brand Evolution 1980’s – 1990’s 2000 – 2007 2008 – 2015 Today / Future Better Weight For a Low Carb Craze and Balanced Approach Healthier Approach Healthier Heart Massive Product to Weight Loss to Eating Proliferation through Healthier Snacking 10
Slide 12: Powerful Brand With Strong Consumer Equity
Powerful Brand With Strong Consumer Equity ~$600mm Brand Strong Brand Attributes Fiscal Year 2016 Sales(1) − 85% aided brand awareness(2) − Stands for “low carb”, “low sugar”, “protein rich” nutrition Frozen Meals $105mm − Proven track record in promoting effective weight loss 18% Number of Servings
Slide 13: Aligned with Consumer Mega Trends
Aligned with Consumer Mega Trends Health Concerns Consensus Building ...Leading Consumers to Shift to Lower Continue to Grow… on Nutrition... Carbs, Lower Sugar, Higher Protein(3) U.S. Obesity Rate(1) 73% of consumers are 78mm Over 100 scientific studies showing lowering carbohydrates(3) U.S. Adults
Slide 14: Atkins is a Leader in the Fast Growing Nutritional Snacking Space
Atkins is a Leader in the Fast Growing Nutritional Snacking Space Highly Focused Snacking Portfolio Category Leader (Total Nutritional Snacking)(1) of 60 SKUs(2) % Market Share Atkins 10.9% Bars Clif Bar 10.7% KIND 8.9% Drinks Premier Protein 7.5% Muscle Milk 4.4% Treats QuestNutrition 3.5% Special
Slide 15: Revenue, Profit and Consumption Growth
Revenue, Profit and Consumption Growth Net Sales and Profit Growth In Line U.S. Snacking POS Data(1) with Long Term Growth Objectives $461 $443 (3) $415 (2) $396 $378 $396 Pro forma combined $333 $369 Net Sales +7.4% $267 $213 $166 $137 +4.8% (4) Pro forma combined $64 $73 Adjusted EBITDA + 12.9% FY
Slide 16: Growth Strategy
GROWTH STRATEGY Simply yGood
Slide 17: Significant Opportunity to Expand Consumer Base as Identified By Proprietary Research
Significant Opportunity to Expand Consumer Base as Identified By Proprietary Research Historically Targeted By Atkins Segment Approach Atkins? Buyer? Historical target: Branded Program 8mm open to low carb Currently 21mm (19%) 3mm Atkins buyers(1) Trying to 38% Atkins penetration Opportunity t
Slide 18: Remain Focused on Key Growth Strategies
Remain Focused on Key Growth Strategies 1 Improved advocacy, education and activation for the core program users 2 Communication to target newly identified self-directed low-carbers 3 Product innovation / portfolio expansion to meet consumer demands for cleaner labels, higher protein and new product
Slide 19: Marketing: Today's Atkins
Marketing: “Today’s Atkins” Program Buyer • Lauren Alaina, country music artist • “Today’s Atkins” Get healthy and lose weight: not just a before and after story • Emphasis on cutting carbs, choosing healthy proteins and healthy foods – focus on Healthy Snacking 18
Slide 20: Lauren Alaina Commercial
‘Simply ¥Good 8 FOODS COMPANY™
Slide 21: Marketing: The Atkins Effect
Marketing: “The Atkins Effect” Self-Directed Low-Carber • No weight loss messaging • “Don’t have to be doing Atkins to get the benefit of Atkins” • Emphasis on “Hidden Sugars” • Pick your bar or shake and go for “The Atkins Effect” • Increased total buyers 20
Slide 22: Oatmeal Commercial
‘Simply ¥Good 2 FOODS COMPANY™
Slide 23: Biker Gang Commercial
‘Simply ¥Good 2 FOODS COMPANY™
Slide 24: 'Clean Bar' Product Initiative
‘Clean Bar’ Product Initiative NEW OLD Atkins continues to improve its current product portfolio to deliver on “cleaner” label/ recognizable ingredient trends while maintaining same great taste 18 Existing products being reformulated and new products developed with “cleaner” labels – Seven out o
Slide 25: Innovation – Fiber + Protein
Innovation – Fiber + Protein New items are focused on delivering against consumer needs and providing superior taste and incremental benefits vs. competitors 30g Protein 7g Fiber 24
Slide 26: Refreshed Packaging on Shelves in January
Refreshed Packaging on Shelves in January CURRENT NEW 25
Slide 27: Refreshed Packaging on Shelves in January
Refreshed Packaging on Shelves in January CURRENT NEW 26
Slide 28: Distribution White Space Opportunities
Distribution White Space Opportunities 2017 Atkins U.S. Snacking Gross Sales By Channel White Space Opportunities Drug E-Commerce E-commerce starting to show strong Club 4% 3% growth with more focus and investment 9% Mass 47% – Q4 E-Commerce gross sales up nearly 50% Grocery 37% – FY17 E-Commerce
Slide 29: Opportunities for Strategic, Accretive M&A
Opportunities for Strategic, Accretive M&A 1. Priority is on nutritious and better-for-you snacking 2. Opportunity for bolt-on acquisitions (e.g. SimplyProtein®) 3. Broader snacking acquisition potential 4. Opportunistically looking at broader food category 28
Slide 30: Financial Overview
FINANCIAL OVERVIEW Simply yGood
Slide 31: Todd Cunfer
Todd Cunfer Chief Financial Officer • Joined Atkins Nutritionals in July 2017 • Over 20 years of financial planning and analysis, capital structure, treasury, supply chain management, commercial operations and merger and acquisition experience • Previous senior finance positions at The Hershey Compa
Slide 32: Fiscal Year Highlights
Fiscal Year Highlights Delivered strong financial results as a result of the implementation of our new growth strategy Targeting a broader consumer audience and introducing new and re- formulated products led to 9th straight year of U.S. snacking POS growth Became publicly traded, strengthened
Slide 33: 4Q17 Represents Solid Growth
4Q17 Represents Solid Growth… Pro Forma Gross Profit Pro Forma Adjusted EBITDA Pro Forma Net Sales(1) (and % Margin)(1) (and % Margin)(1) 10.3% Year-Over- 15.3% Year-Over- 3.5% Year-Over-Year Year Growth Year Growth Growth $47.4 $17.4 $97.6 $16.8 $41.1 $88.5 47.9% 47.8% 48.6% 19.0% 46.4% 17.8% 18.7%
Slide 34: Favorable End to Fiscal Year 2017
Favorable End to Fiscal Year 2017 Pro Forma Gross Profit Pro Forma Adjusted EBITDA Pro Forma Net Sales(1) (and % Margin)(1) (and % Margin)(1) 7.4% Year-Over-Year 9.8% Year-Over-Year 12.9% Year-Over-Year Growth Growth Growth $396.2 $72.5 $369.0 $186.2 $64.2 $169.5 18.3% 47.0% 45.9% 17.4% FY16A FY17A
Slide 35: Highly Attractive Cash Flow Characteristics
Highly Attractive Cash Flow Characteristics Asset-lite business model with strong cash flow generation - Capital expenditures of ~$1mm - Working capital needs of 10% - 11% of Net Sales Capital Expenditures as % of Net Sales Working Capital as % of Net Sales Minimal Annual Modest Working Capital Expe
Slide 36: Balance Sheet Highlights
Balance Sheet Highlights Solid balance sheet and cash flow provide financial flexibility to support future growth As of August 26, 2017, the Company has Cash of $56.5 million and a $200.0 million Term Loan outstanding, resulting in a pro forma Net Debt to Adjusted EBITDA ratio for the LTM of 2.0
Slide 37: Summary
Summary Confident in growth opportunities and our plans to execute against them Well-positioned to deliver 10th straight year of U.S. snacking POS growth in FY 18 Expect to deliver 2018 net sales in-line with previously stated long-term growth algorithm of 4-6% Anticipate Adjusted EBITDA wil
Slide 38: Q&A
Q&A Simply yGood 7 FOODS COMPANY™