The Simply Good Foods Company (NASDAQ:SMPL) Q3 2023 Earnings Call Transcript

Is that or could we say acquisition activity is still top of mind given CEO transitional dynamics in the near term? Or is it more hey, let’s fix the core, let’s support the growth. Let’s go for organic opportunity to work with the retailers. And yes, if something comes along, we’ll take a look at it but we’re really focused on the other side.

Joe Scalzo: I’ll start and then I’ll let the other guys jump in. Look, the environment is about as low as I’ve seen in the last 6 years, mainly because there’s just not a lot folks transacting given the cost of debt right now. So you’re just not seeing a lot of activity and the things that have come to market, frankly, haven’t transacted. So we — I think you’ve characterized our view which is we’re focused on organic growth until the right opportunity comes along at the right price with the right brands that we like. And we’re in a from a balance sheet standpoint in a good position to do that. But the — just the activity in the market right now is not particularly heavy given the cost of debt. And I’ll turn it over to anyone else wants to add to that.

Shaun Mara: No. I mean we love the leverage situation we’re at now, a little over 1x. We’ll be in really good shape by the end of the year. As you know, that we you generate a lot of cash and that’s helpful from paying down debt. We’ve done that this year and we continue to see that runway overall but we constantly look at stuff. I think the answer to your question is both, we’re going to do things we went to, to grow the business organically but we’re also going to look at things and look at opportunities that are out there and we continue to do that.

Operator: Our next question comes from the line of Jason English with Goldman Sachs.

Jason English: Thank you for sliding in. And Joe, good luck. Enjoy as you find yourself with some more free time. [Indiscernible] you for that and thank you so much for humoring me and by 1 million and sometimes aggregate questions over the years.

Joe Scalzo: Jason, I asked Mark to make sure you were my last question.

Jason English: I’m going to — I’m going to inaugurate Geoff is going to a great questions but in a minute but first a housekeeping item. The growth expectations you gave for next year were those inclusive or exclusive of the 53rd week?

Joe Scalzo: Those were exclusive with the 53rd week; probably put another point on top of the numbers I gave. So at high end of our algorithm for top line, high single-digit bottom line, plus the 53rd week.

Jason English: Great stuff. Okay, now the inaugurating question. And I apologize in advance but it’s on my mind, it’s on a lot of investors’ minds. But you mentioned weight wellness, the broader weight wellness industry is being disrupted by all these new pharmaceutical solutions and it’s still early. The disruption is only going to get bigger as more drugs come to market, more adoption, more insurance coverage. And legacy weight management businesses across the board are under pressure, right? Like listed programs, food and we’re all still in the pain. And when I look at active in that context, it feels like this is a bigger issue than just a product cycle or innovation. It feels like this could be a bit of a secular turning point in the industry. What gives you confidence that that’s not the case, that this is something that can be so easily resolved with a tactical product solution?