# Dear Fellow Stockholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-defensive-packaged-foods/NASDAQ_SMPL_2022/NASDAQ_SMPL_2022.mmd` · pages 2-8_

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Dear Fellow Stockholders,

I am pleased to provide you with the Annual Report to Stockholders of The Simply Good Foods Company for fiscal year 2022.

Fiscal year 2022 was a successful year for our company, but like last year, there were many challenges to overcome, including higher costs, supply chain disruptions, slowing demand driven primarily by higher list prices, and pressures related to an evolving recessionary economy. Despite this, we completed another year of strong financial and marketplace performance:

• Net sales increased 16.2% to $1.17 billion;

- Net income increased to \(108.6 million and Adjusted EBITDA \( ^{\dagger} \)  increased 12.9% to \)234.0 million resulting in Adjusted EBITDA margin of 20.0%;

- Cash and cash equivalents of \(67.5 million along with \)50 million of term loan debt repayments resulted in a trailing twelve-month Net Debt to Adjusted EBITDA \( ^{\dagger} \)  ratio of 1.4x at the end of the fiscal year; and

- Our market share increased within the nutritional snacking category and our brands outperformed in the relevant subsegments of the category — active nutrition and weight management.

This performance is a testament to the resilience of our business, the strength of our growth strategies as well as the capabilities of our organization to execute. This year is strong evidence of the long-term growth prospects of our business.

We continue to believe the advantages of our business are compelling.

We compete in the attractive nutritional snacking category, which is under-penetrated from a consumer household standpoint relative to other food and snacking categories. Further, the category has a long track record of consumption growth driven by increases in household penetration. At around 50% household penetration, we believe there is a long runway for future growth.

Our brands and our category benefit from long-term consumer trends towards health and wellness, convenience, portability, snacking, and meal replacement. While some of these consumer trends were disrupted during the pandemic, for the most part, they are returning to pre-pandemic behaviors.

In Quest and Atkins we possess two scale lifestyle consumer brands that generate over $500 million each in net sales. These brands are uniquely positioned around protein-rich, low-sugar and low-carbohydrate macronutrient profiles, which are growingly sought by wellness-seeking consumers. In fact, low-carbohydrate, low-sugar, protein-rich nutrition has arguably become a mainstream approach today. That is a big change among both consumers and nutrition experts over the last five years or so.

Our well-diversified business is a strength. We have a broad offering of brands and products and are nicely developed across sales channels and customers, giving us multiple avenues for growth.

And lastly, our growth strategies have proven resilient and our organization capable of executing well despite the myriad external challenges we have faced and will face in the future.

As we emerge from the challenges of the pandemic and look to fiscal 2023, we are even more confident in our strategies, our people and the future growth prospects of our business.

## Fiscal Year 2022 Overview

We began fiscal year 2022 with a price increase to offset high inflation within our supply chain. This was soon followed by a resurgent COVID-19 Omicron virus that affected consumer shopping behavior and mobility. However, the investments we made in innovation, marketing and growing retail channels were major contributors to our performance and our ability to continue to attract new consumers to our brands.

 \( ^{\dagger} \)  Adjusted EBITDA and Net Debt to Adjusted EBITDA are non-GAAP financial measures. Please refer to Annex II of our proxy statement for the 2023 Annual Meeting of Stockholders for a reconciliation of these non-GAAP financial measures.

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During the year, we continued to invest in advertising and marketing to drive new buyers to both of our brands. Marketing expense increased about 9% in the year. The Atkins advertising campaign featuring Rob Lowe continues to resonate with consumers. Atkins brand relevance remains strong, supported by a growing base of buyers, up 11% year-over-year. Quest launched on-air television advertising for the first time in the brand's history. It is a fun campaign focused on four individuals; unheralded NFL and WNBA rookies and two working professionals who changed careers to follow their respective passions. The common theme is they are all fueled by "Athlete worthy nutrition in pursuit of their Quest." Our strong gross margins, despite an inflationary cost environment, give us the financial flexibility to make these investments.

Recent product launches outside our core protein bar and ready-to-drink shake forms have resonated with consumers, driving growth in new snacking occasions. In fiscal year 2022, we launched products such as the Quest frosted cookie and Atkins protein chips and cookies. These products are off to a good start and we are continuing to drive awareness, trial and repeat. Additionally, Quest launched mini versions of its flagship protein bars in Chocolate Chip Cookie Dough and Cookies & Cream flavors. While early, the new minis are off to a great start and driving incremental users to the brand.

We continue to invest with brick-and-mortar grocery and mass channel retailers who are focused on driving foot traffic to their stores. During the year, we also made investments in the Atkins e-commerce business, leveraging the capabilities acquired during the Quest acquisition, concentrating on digital marketing and portfolio alignment. Our focus on fewer SKUs with larger pack sizes resulted in greater levels of consumption, sales growth, and profitability. We also invested in outsourced cold ship capabilities so we could sell and ship meltable products more broadly and efficiently during the warmer May to September months.

Our supply chain team continued to perform well in a challenging environment and customer service performance approached pre-pandemic target levels. Their efforts, combined with sales and marketing plans, enabled us to gain market share within the nutritional snacking category. For the full fiscal year 2022, Simply Good Foods retail takeaway in measured channels increased 15.0% versus nutritional snacking category growth of 14.7%. Furthermore, as noted above, both of our brands meaningfully outperformed their respective subsegments of weight management and active nutrition.

## Mission, Vision and Values

Our mission, vision and values continue to be very important to us and underpin how we act as individuals and an organization.

Our mission is to empower healthy lives through smart and satisfying nutrition. Our vision is to lead the nutritious snacking movement with trusted brands that offer a variety of convenient, innovative, great-tasting, better-for-you snacks, meal replacements, and other product offerings. Our values are critical to our success in fulfilling our mission. They are:

• Act with Integrity;

• Lead with Innovation;

• Succeed through Interdependence;

• Be Empowered; and

• Bring Passion Every Day.

## Commitment to Our Communities

We believe we play an important role in helping to improve nutrition and overall wellness in the United States through scientific research, education, advocacy, and community engagement.

Since 2016, we have advocated for more inclusive guidance in the U.S. Department of Agriculture's and U.S. Department of Health and Human Services' Dietary Guidelines for Americans (the "Dietary Guidelines"), which is released every five years. Our goal is to expand the Dietary Guidelines to offer solutions for more Americans, including the more than half of the U.S. population suffering from negative metabolic-related conditions such as cardiovascular disease, prediabetes, diabetes and obesity. We also believe expanding the Dietary Guidelines would help to address health equity in many underserved populations in the United States who have higher rates of metabolic-related diseases. The advocacy work we have done is aligned with recent guidance issued by major health organizations such as the American Diabetes Association and the American Heart Association, both of which recommend a lower carbohydrate dietary approach as an option for those with diabetes.

We also strive to make a difference in our communities. During fiscal 2022, we launched The Quest Challenge, a grant program for individuals making a difference in their respective communities supporting health and wellness. In our inaugural year, we provided four separate $20,000 grants. The Quest Challenge grants were awarded following a competitive process in which applicants expressed their current philanthropic work and what they aim to achieve if they received a

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grant. Recipients of this year's grants have used this money to improve the health and wellbeing of underserved and at-risk children, create safe spaces for children to play or learn a new skill, and encourage physical and artistic activities to build confidence and self-esteem. We will continue to follow the progress of our recipients and their effect on their communities. Additionally, for the second year, we participated in Walmart's "Fight Hunger. Spark Change." campaign. Through this program, Simply Good Foods secured at least 500,000 meals for Feeding America.

We are proud of our commitment to advancing health, nutrition, and wellbeing education and products as a way for consumers to achieve their wellness goals.

## Commitment to Diversity, Equity & Inclusion ("DE&I")

Our Board of Directors and senior leadership team remain committed to fostering a diverse, equitable and inclusive culture for our employees as we believe it has a positive effect on our ability to achieve our mission. Our Board of Directors created its Corporate Responsibility and Sustainability Committee to oversee both our environmental, social and governance ("ESG") initiatives and our DE&I strategies and related matters. During fiscal year 2022, we established a Diversity, Equity, Inclusion and Belonging Council consisting of mid-level and senior leaders, so our DE&I efforts are informed and led by a cross section of our leaders. The Council's mission is to foster a positive, open, and trusted culture of belonging where every person feels empowered to bring their unique selves to the workplace resulting in a competitive advantage through thought-leadership and talent growth that halos beyond our workforce to our partners and community, creating an inclusive ecosystem.

## Focused on Success in Fiscal 2023

We executed well against our priorities in fiscal year 2022, and we believe we are well-positioned to succeed in fiscal year 2023. We are confident in the strength of our business and the diversification of our portfolio across brands, products, and channels. The current recessionary conditions and their potential effect on shopping behavior and consumer demand provide a challenging environment for our business, especially given historically high retail prices. However, we are cautiously optimistic about our growth prospects.

I am fortunate to work with a best-in-class leadership team and Board of Directors. Our ability to effectively communicate and collaborate with each other is a big part of our success. I would like to personally thank all our Directors and in particular those in key leadership positions: James M. Kilts, our Chairman, David J. West our Vice Chairman, Nomi P. Ghez, our Nominating and Corporate Governance Committee Chair, Michelle P. Goolsby, our Corporate Responsibility and Sustainability Committee Chair, Clayton C. Daily, Jr., our Compensation Committee Chair, and Joseph J. Schena, our Audit Committee Chair.

Lastly, on behalf of our Board of Directors, employees and myself, I want to thank you, our stockholders, for your investment in The Simply Good Foods Company and your confidence in us to continue to build stockholder value. We hope you and your families remain healthy and safe.

Sincerely,

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Joseph E. Scalzo

President & Chief Executive Officer