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. 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. The acquisition of Only What You Need, or OWYN, was completed on June 13, 2024. As we have now lapped the anniversary date of the OWYN acquisition, the use of organic refers to year-over-year growth for brands we have owned for more than 12 months on a comparable basis.
We delivered 9% reported net sales growth, including 3% on an organic basis, and grew adjusted EBITDA by 3%. On a pro forma basis, including OWYN, but excluding the extra week from the prior year, net sales increased over 4% with adjusted EBITDA up approximately 6%. Our recent acquisition of OWYN enhanced our presence in the fast-growing ready-to-drink shake segment, while positioning us to become a leader of the rapidly accelerating clean label movement. We ramped up productivity initiatives to combat inflation and free up funds to fuel our growth.
Overall, our fiscal year finished generally in line with our guidance, with some modestly higher costs impacting our margins as we exited the year. Organic net sales grew at least 3% in each of the last three quarters. Excluding the small contribution from OWYN prior to the anniversary date of the acquisition's closing, as well as the lap of the 53rd week, organic net sales grew 3.5%. Excluding the inventory step-up related to the acquisition of OWYN, which was a 90 basis points headwind to gross margins in the fourth quarter of last year, gross margins declined 540 basis points.
| Metric | Period | Current guidance |
|---|---|---|
| Targeted pricing actions | FY2026 | In market by end of Q1 across all three brands; low single-digit benefit once fully implemented (new) |
| Atkins net sales | FY2026 H1 | Down more than 20%, better in second half (new) |
| Quest net sales | FY2026 | Up really high single digits (new) |
| OWYN net sales | FY2026 | Double-digit range (new) |
| Gross margin trajectory | FY2026 | Improving modestly in Q3, more meaningfully in Q4 as cocoa coverage shifts to lower rates (new) |
| Metric | YoY | Note |
|---|---|---|
| Q4 reported net sales | -1.8% to $369M | Lapping the 53rd week and the OWYN pre-anniversary period; Atkins distribution losses partially offset by Quest growth. |
| Q4 organic net sales | +3.5% | Quest growth of 15.9% from strong salty snacks, partially offset by an 18.3% Atkins decline. |
| Q4 gross margin | -450 bps to 34.3% | Higher input costs, most notably cocoa, plus initial tariff impact, only partially offset by productivity and pricing. |
| Q4 adjusted EBITDA | -14.5% to $66.2M | Lower gross profit from inflation and the lap of the 53rd week. |
| Q4 selling and marketing expense | -20.6% to $32.4M | Planned pullback in Atkins marketing and lapping the 53rd week. |
| Full-year net sales | +9% | OWYN acquisition added nearly eight points, partially offset by about 2% from lapping the 53rd week. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Atkins distribution rationalization | Ongoing shelf-space pressure discussed in prior periods | Tail SKUs trimmed; ~75% of sales from top-two-quartile SKUs; only ~10%-15% of SKUs in bottom quartile remain | Ongoing |
| Cocoa and tariff inflation | — | High contracted cocoa prices and tariffs pressure margins into H1 FY2026; relief expected from Q3 as lower-cost coverage kicks in | Peaking then easing |
| Category mainstreaming beyond the traditional aisle | — | High-protein/low-sugar demand expanding addressable market; investing in displays, club, and away-from-home channels | Expanding |
| OWYN clean-label positioning | — | Product quality issue largely resolved with new formulation shipping since August; increased trade and marketing to restart trial | Recovering |
| Quest momentum and innovation | — | Salty snacks/chips fastest-growing; capacity expanding for the second time in two years; new club distribution being phased through the year | Expanding |
| Capital allocation | — | Buybacks, CapEx for capacity, and M&A treated as 'and not or'; $150M buyback increase approved; comfortable debt levels | Active |