The Simply Good Foods Company Reports Fiscal First Quarter 2026 Financial Results and Reaffirms Fiscal Year 2026 Outlook
First Quarter Summary:(1)
- Net sales of
$340.2 million versus$341.3 million - Net income of
$25.3 million versus$38.1 million - Earnings per diluted share (“EPS”) of
$0.26 versus$0.38 - Adjusted Diluted EPS(2) of
$0.39 versus$0.49 - Adjusted EBITDA(3) of
$55.6 million versus$70.1 million
Reaffirm Fiscal Year 2026(4) Outlook:
- Net sales expected to range between -2% and +2% year-over-year
- Gross margins expected to decline between 100 and 150 basis points year-over-year
- Adjusted EBITDA expected to range between -4% and +1% year-over-year
“Our first quarter financial performance came in modestly ahead of our expectations. Total company consumption growth of 2% was led by Quest and OWYN, which grew aggregate consumption double-digits, while Atkins performed as expected," said
First Quarter 2026 Results
Net sales of
Gross profit of
Operating expenses of
Net interest expense of
The effective tax rate was 25.3%.
Net income of
Adjusted EBITDA of
Reported earnings per diluted share were
Adjusted Diluted EPS was
Weighted average diluted shares outstanding of 99.1 million declined modestly versus the comparable year ago period, reflecting share repurchases.
Balance Sheet and Cash Flow
At the end of the first quarter of fiscal year 2026, the Company had cash of
During the quarter, the Company repurchased approximately 5.0 million shares of its common stock for approximately
Share Repurchase Authorization
On
Fiscal Year 2026 Outlook
The Company is reaffirming its previously provided outlook for fiscal year 2026:
Net Sales expected to range between -2% and +2% year-over-year- Gross Margins expected to decline between 100 and 150 basis points year-over-year
- Adjusted EBITDA expected to range between -4% and +1% year-over-year
The Company's outlook continues to assume an increase in marketing spending for Quest and OWYN, including a significant increase in support for the OWYN brand intended to increase trial and build awareness. Management is focused on long-term growth for the total Company and will look to provide more fuel for growth should it find the opportunity to do so.
Consistent with its previously provided outlook, the Company expects the second half of the fiscal year to be stronger on both the top and bottom line than the first half. Continued innovation and distribution-driven growth from Quest and OWYN across the year are expected to be offset by challenges for Atkins, with the timing of price elasticity and lapping of certain year-ago promotional events expected to reflect incremental headwinds to growth in the first half of the year, particularly in Q2 which the Company continues to expect will be its weakest net sales growth quarter of the year.
Declines for gross margins and Adjusted EBITDA, and the phasing of profit growth for the year, are expected to primarily reflect the timing lag between elevated inflation and tariff expenses in the first half and building benefits from productivity, pricing, and improved costs expected in the second half of the year. As a result, the Company expects year-over-year margin expansion and Adjusted EBITDA growth to begin in the third quarter and build through the end of the fiscal year.
Finally, with the increase to the Company's term loan balance and to account for the Company's fiscal year-to-date share repurchases, the Company now expects net interest expense to be in the range of
The foregoing outlook assumes current economic conditions, consumer purchasing behavior and prevailing tariff rates remain generally consistent across the Company's fiscal year.
___________________________________
(1) All comparisons for the first quarter ended
(2) Adjusted Diluted Earnings Per Share is a non-GAAP financial measure. The Company excludes acquisition-related costs, such as Business Transaction costs, integration expense and depreciation and amortization expense in calculating Adjusted Diluted Earnings Per Share. Please refer to "Reconciliation of Adjusted Diluted Earnings Per Share" in this press release for an explanation and reconciliation of this non-GAAP financial measure.
(3) Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") is a non-GAAP financial measure. Please refer to the "Reconciliation of EBITDA and Adjusted EBITDA" in this press release for an explanation and reconciliation of this non-GAAP financial measure.
(4) The Company does not provide a forward-looking reconciliation of expected Fiscal Year 2026 Adjusted EBITDA to Net Income, the most directly comparable GAAP financial measure, because we are unable to provide such a reconciliation without unreasonable effort due to the unavailability of reliable estimates for certain components of consolidated net income and the respective reconciliations, and the inherent difficulty of predicting what the changes in these components will be throughout the fiscal year. As these items may vary greatly between periods, we are unable to address the probable significance of the unavailable information, which could significantly affect our future financial results.
(5) "Organic" growth refers to growth for brands owned by
(6) Combined Quest, Atkins, and OWYN Circana MULO++C and Company unmeasured channel estimate for the 13-weeks ending
(7) Net Debt to Adjusted EBITDA is a non-GAAP financial measure which
Conference Call and Webcast Information
The Company will host a conference call with members of the executive management team to discuss these results today,
About
Investor Contact
Vice President, Investor Relations and
jlevine@simplygoodfoodsco.com
Forward Looking Statements
Certain statements made herein are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by or include words such as “will”, “expect”, “intends” or other similar words, phrases or expressions. These statements relate to future events or our future financial or operational performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. We caution you that these forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. You should not place undue reliance on forward-looking statements. These statements reflect our current views with respect to future events, are based on assumptions and are subject to risks and uncertainties. These risks and uncertainties relate to, among other things, our operations being dependent on changes in consumer preferences and purchasing habits regarding our products, a global supply chain and effects of supply chain constraints, inflationary pressure and tariffs on us and our contract manufacturers, our ability to continue to operate at a profit or to maintain our margins, the sufficiency of our sources of liquidity and capital, our ability to maintain current operation levels and implement our growth strategies, our ability to maintain and gain market acceptance for our products or new products, our ability to capitalize on attractive opportunities, our ability to respond to competition and changes in the economy including changes regarding inflation and increasing ingredient and packaging costs and labor challenges due to tariffs or other challenges at our contract manufacturers and third party logistics providers, the amounts of or changes with respect to certain anticipated raw materials and other costs, difficulties and delays in achieving the synergies and cost savings in connection with acquisitions, changes in the business environment in which we operate including general financial, economic, capital market, regulatory and geopolitical conditions affecting us and the industry in which we operate, our ability to maintain adequate product inventory levels to timely supply customer orders, changes in taxes, tariffs, duties, governmental laws and regulations, the availability of or competition for other brands, assets or other opportunities for investment by us or to expand our business, competitive product and pricing activity, difficulties of managing growth profitably, the effect pandemics or other global disruptions on our business, financial condition and results of operations, the loss of one or more members of our management team, potential for increased costs, the harm to our business resulting from unauthorized access of the information technology systems we use in our business, and other risks and uncertainties indicated in the Company’s Form 10-K, Form 10-Q, and Form 8-K reports (including all amendments to those reports) filed with the U.S. Securities and Exchange Commission from time to time. In addition, forward-looking statements provide the Company’s expectations, plans or forecasts of future events and views as of the date of this communication. Except as required by law, the Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date and cautions investors not to place undue reliance on any such forward-looking statements. These forward-looking statements should not be relied upon as representing the Company’s assessments as of any date subsequent to the date of this communication.
Consolidated Balance Sheets (Unaudited, dollars in thousands, except share and per share data) |
||||||||
2025 |
2025 |
|||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 194,051 | $ | 98,468 | ||||
| Accounts receivable, net | 129,178 | 164,978 | ||||||
| Inventories | 181,148 | 167,217 | ||||||
| Prepaid expenses | 4,398 | 7,209 | ||||||
| Other current assets | 5,064 | 15,812 | ||||||
| Total current assets | 513,839 | 453,684 | ||||||
| Long-term assets: | ||||||||
| Property and equipment, net | 38,851 | 39,738 | ||||||
| Intangible assets, net | 1,257,642 | 1,261,603 | ||||||
| 589,974 | 589,974 | |||||||
| Other long-term assets | 50,321 | 51,046 | ||||||
| Total assets | $ | 2,450,627 | $ | 2,396,045 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 75,486 | $ | 78,298 | ||||
| Accrued interest | 66 | 44 | ||||||
| Accrued expenses and other current liabilities | 27,069 | 46,219 | ||||||
| Total current liabilities | 102,621 | 124,561 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt, less current maturities | 396,744 | 249,066 | ||||||
| Deferred income taxes | 169,627 | 166,091 | ||||||
| Other long-term liabilities | 47,519 | 49,494 | ||||||
| Total liabilities | 716,511 | 589,212 | ||||||
| See commitments and contingencies (Note 9) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, |
— | — | ||||||
| Common stock, |
1,039 | 1,037 | ||||||
| (230,026 | ) | (129,337 | ) | |||||
| Additional paid-in-capital | 1,349,610 | 1,346,687 | ||||||
| Retained earnings | 616,148 | 590,879 | ||||||
| Accumulated other comprehensive loss | (2,655 | ) | (2,433 | ) | ||||
| Total stockholders’ equity | 1,734,116 | 1,806,833 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,450,627 | $ | 2,396,045 | ||||
Consolidated Statements of Income and Comprehensive Income (Unaudited, dollars in thousands, except share and per share data) |
||||||||
| Thirteen Weeks Ended | ||||||||
2025 |
2024 |
|||||||
| Net sales | $ | 340,198 | $ | 341,268 | ||||
| Cost of goods sold | 230,298 | 210,782 | ||||||
| Gross profit | 109,900 | 130,486 | ||||||
| Operating expenses: | ||||||||
| Selling and marketing | 29,677 | 32,994 | ||||||
| General and administrative | 38,006 | 38,064 | ||||||
| Depreciation and amortization | 4,633 | 4,160 | ||||||
| Business transaction costs | — | 643 | ||||||
| Total operating expenses | 72,316 | 75,861 | ||||||
| Income from operations | 37,584 | 54,625 | ||||||
| Other income (expense): | ||||||||
| Interest income | 499 | 776 | ||||||
| Interest expense | (4,286 | ) | (7,861 | ) | ||||
| (Loss) gain on foreign currency transactions | (57 | ) | 120 | |||||
| Other income | 76 | 15 | ||||||
| Total other income (expense) | (3,768 | ) | (6,950 | ) | ||||
| Income before income taxes | 33,816 | 47,675 | ||||||
| Income tax expense | 8,547 | 9,553 | ||||||
| Net income | $ | 25,269 | $ | 38,122 | ||||
| Other comprehensive income: | ||||||||
| Foreign currency translation, net of reclassification adjustments | (222 | ) | (387 | ) | ||||
| Comprehensive income | $ | 25,047 | $ | 37,735 | ||||
| Earnings per share from net income: | ||||||||
| Basic | $ | 0.26 | $ | 0.38 | ||||
| Diluted | $ | 0.26 | $ | 0.38 | ||||
| Weighted average shares outstanding: | ||||||||
| Basic | 98,749,340 | 100,394,693 | ||||||
| Diluted | 99,051,004 | 101,479,603 | ||||||
Consolidated Statements of Cash Flows (Unaudited, dollars in thousands) |
||||||||
| Thirteen Weeks Ended | ||||||||
2025 |
2024 |
|||||||
| Operating activities | ||||||||
| Net income | $ | 25,269 | $ | 38,122 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 6,205 | 5,047 | ||||||
| Amortization of deferred financing costs and debt discount | 150 | 506 | ||||||
| Stock compensation expense | 3,083 | 3,844 | ||||||
| Estimated credit losses | 20 | 750 | ||||||
| Unrealized loss (gain) on foreign currency transactions | 57 | (120 | ) | |||||
| Deferred income taxes | 3,536 | 3,374 | ||||||
| Amortization of operating lease right-of-use asset | 1,480 | 1,678 | ||||||
| Other | (279 | ) | (402 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | 35,768 | 67 | ||||||
| Inventories | (13,605 | ) | (13,157 | ) | ||||
| Prepaid expenses | 2,672 | (958 | ) | |||||
| Other current assets | 10,794 | (1,396 | ) | |||||
| Accounts payable | (2,012 | ) | 319 | |||||
| Accrued interest | 22 | (189 | ) | |||||
| Accrued expenses and other current liabilities | (22,288 | ) | (3,707 | ) | ||||
| Other assets and liabilities | (778 | ) | (1,757 | ) | ||||
| Net cash provided by operating activities | 50,094 | 32,021 | ||||||
| Investing activities | ||||||||
| Purchases of property and equipment | (2,096 | ) | (307 | ) | ||||
| Investments in intangible and other assets | — | (362 | ) | |||||
| Net cash used in investing activities | (2,096 | ) | (669 | ) | ||||
| Financing activities | ||||||||
| Proceeds from option exercises | 1,056 | 9,984 | ||||||
| Tax payments related to issuance of restricted stock units and performance stock units | (1,214 | ) | (2,315 | ) | ||||
| Repurchase of common stock | (99,638 | ) | — | |||||
| Principal payments of long-term debt | — | (50,000 | ) | |||||
| Proceeds from issuance of long-term debt | 150,000 | — | ||||||
| Deferred financing costs | (2,585 | ) | — | |||||
| Net cash provided by (used in) financing activities | 47,619 | (42,331 | ) | |||||
| Cash and cash equivalents | ||||||||
| Net increase (decrease) in cash | 95,617 | (10,979 | ) | |||||
| Effect of exchange rate on cash | (34 | ) | 208 | |||||
| Cash at beginning of period | 98,468 | 132,530 | ||||||
| Cash and cash equivalents at end of period | $ | 194,051 | $ | 121,759 | ||||
The following is a summary of revenue disaggregated by geographic area and brands:
| Thirteen Weeks Ended | ||||||
| (In thousands) | 2025 |
2024 |
||||
| Atkins | $ | 90,270 | $ | 108,168 | ||
| Quest | 210,343 | 191,937 | ||||
| OWYN | 31,182 | 32,254 | ||||
| 331,795 | 332,359 | |||||
| International | 8,403 | 8,909 | ||||
| Total net sales | $ | 340,198 | $ | 341,268 | ||
| (1)The |
||||||
Reconciliation of EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA are non-GAAP financial measures commonly used in our industry and should not be construed as alternatives to net income as an indicator of operating performance or as alternatives to cash flow provided by operating activities as a measure of liquidity (each as determined in accordance with GAAP).
The following unaudited table provides a reconciliation of EBITDA and Adjusted EBITDA to its most directly comparable GAAP measure, which is net income, for the thirteen weeks ended
| (In thousands) |
Thirteen Weeks Ended | |||||||
2025 |
2024 |
|||||||
| Net income | $ | 25,269 | $ | 38,122 | ||||
| Interest income | (499 | ) | (776 | ) | ||||
| Interest expense | 4,286 | 7,861 | ||||||
| Income tax expense | 8,547 | 9,553 | ||||||
| Depreciation and amortization | 6,205 | 5,047 | ||||||
| EBITDA | 43,808 | 59,807 | ||||||
| Stock-based compensation expense | 3,083 | 3,844 | ||||||
| Business transaction costs | — | 643 | ||||||
| Inventory step-up | — | 974 | ||||||
| Integration expense | 5,918 | 4,931 | ||||||
| Term loan transaction fees | 2,828 | — | ||||||
| Other(1) | (13 | ) | (131 | ) | ||||
| Adjusted EBITDA | $ | 55,624 | $ | 70,068 | ||||
| (1)Other items consist principally of exchange impact of foreign currency transactions and other expenses. | ||||||||
Reconciliation of Adjusted Diluted Earnings Per Share
Adjusted Diluted Earnings per Share. Adjusted Diluted Earnings per Share is a non-GAAP financial measure commonly used in our industry and should not be construed as an alternative to diluted earnings per share as an indicator of operating performance.
The following unaudited tables below provide a reconciliation of Adjusted Diluted Earnings Per Share to its most directly comparable GAAP measure, which is diluted earnings per share, for the thirteen weeks ended
| Thirteen Weeks Ended | ||||||||
2025 |
2024 |
|||||||
| Diluted earnings per share | $ | 0.26 | $ | 0.38 | ||||
| Depreciation and amortization | 0.06 | 0.05 | ||||||
| Stock-based compensation expense | 0.03 | 0.04 | ||||||
| Business transaction costs | — | 0.01 | ||||||
| Inventory step-up | — | 0.01 | ||||||
| Integration expense | 0.06 | 0.05 | ||||||
| Term loan transaction fees | 0.03 | — | ||||||
| Tax effects of adjustments(1) | (0.05 | ) | (0.04 | ) | ||||
| Rounding(2) | — | (0.01 | ) | |||||
| Adjusted diluted earnings per share | $ | 0.39 | $ | 0.49 | ||||
| (1)This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. The tax effect of each adjustment is computed (i) by dividing the gross amount of the adjustment, as shown in the Adjusted EBITDA reconciliation, by the number of diluted weighted average shares outstanding for the applicable fiscal period and (ii) applying an overall assumed statutory tax rate of 25% for the thirteen week period ended |
||||||||
| (2)Adjusted Diluted Earnings Per Share amounts are computed independently for each quarter. Therefore, the sum of the quarterly Adjusted Diluted Earnings Per Share amounts may not equal the year to date Adjusted Diluted Earnings Per Share amounts due to rounding. | ||||||||
Reconciliation of Net Debt to Adjusted EBITDA
Net Debt to Adjusted EBITDA. Net Debt to Adjusted EBITDA is a non-GAAP financial measure which
The following unaudited table below provides a reconciliation of Net Debt to Adjusted EBITDA as of
| (In thousands) | 2025 |
|||
| Net Debt: | ||||
| Total debt outstanding under the Credit Agreement | $ | 400,000 | ||
| Less: cash and cash equivalents | (194,051 | ) | ||
| Net Debt as of |
$ | 205,949 | ||
| Trailing twelve months Adjusted EBITDA: | ||||
| Add: Adjusted EBITDA for the thirteen weeks ended |
$ | 55,624 | ||
| Add: Adjusted EBITDA for the fiscal year ended |
278,162 | |||
| Less: Adjusted EBITDA for the thirteen weeks ended |
(70,068 | ) | ||
| Trailing twelve months Adjusted EBITDA as of |
$ | 263,718 | ||
| Net Debt to Adjusted EBITDA | 0.8 | x | ||
Source: Simply Good Foods USA, Inc.