Third Quarter Summary:(1)
- Net sales of
$357.0 million versus$381.0 million - Net loss of
$52.0 million versus net income of$41.1 million - Loss per diluted share of
$0.58 versus earnings per diluted share of$0.40 - Adjusted Diluted EPS(2) of
$0.42 versus$0.51 - Adjusted EBITDA(3) of
$57.2 million versus$73.9 million
Updating Fiscal Year 2026(4) Outlook:
- Net sales expected to range between
$1.345 and$1.355 billion , or a decline of roughly 7% to 6% year-over-year - Gross margins expected to decline approximately 375 basis points year-over-year
- Adjusted EBITDA expected to range between
$220 and$225 million , or -21% to -19% year-over-year
“Our third quarter results reflect initial steps against the turnaround priorities we outlined last quarter. While we are still in the early stages of this work, we are beginning to see some signs of improved alignment around our three key priorities. We delivered third quarter net sales of
Scalzo continued, “At the same time, we recognize significant work remains, and our priorities are unchanged. We are focused on strengthening our business model, improving the consistency of our execution, and reinvesting behind our most important brand opportunities to support household penetration. We believe steady progress against these actions will position
Third Quarter 2026 Results
Net sales of
Gross profit of
Selling and marketing expenses of
General and administrative ("G&A") expenses of
As part of the Company's process to evaluate the carrying value of its brands, the Company recognized an aggregate
Net interest expense of
The effective tax rate was 5.4%.
Net loss of
Adjusted EBITDA of
Reported loss per diluted share was
Adjusted Diluted EPS was
Weighted average diluted shares outstanding of 89.9 million declined modestly versus the comparable year ago period, reflecting share repurchases.
Year-to-Date Third Quarter Fiscal Year 2026 Highlights vs. Year-to-date Third Quarter Fiscal Year 2025
Net sales of
Gross profit of
Selling and marketing expenses of
G&A expenses of
As part of the Company's process to evaluate the carrying value of its brands, the Company recognized an aggregate
Net interest expense of
The effective tax rate was 22.1%.
Net loss of
Adjusted EBITDA of
Reported loss per diluted share was
Adjusted Diluted EPS was
Weighted average diluted shares outstanding of 93.7 million declined modestly versus the comparable year ago period, reflecting share repurchases.
Balance Sheet and Cash Flow
At the end of the third quarter of fiscal year 2026, the Company had cash of
During the quarter, the Company repurchased approximately 2.1 million shares of its common stock for approximately
Fiscal Year 2026 Outlook
The Company is updating its previously provided outlook for fiscal year 2026:
Net Sales expected to range between$1.345 to$1.355 billion , or a decline of roughly 7% to 6% year-over-year- Gross Margins expected to decline approximately 375 basis points year-over-year
- Adjusted EBITDA expected to range between
$220 to$225 million , or -21% to -19% year-over-year
The Company continues to expect net interest expense in the range of
For the fourth quarter of fiscal year 2026:
- The Company expects
Net Sales to range between$322 to$332 million , or -13% to -10% year-over-year - Adjusted EBITDA expected to range from
$52 to$57 million , or -22% to -14% year-over-year - The Company expects an effective tax rate of approximately 25%
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 third quarter ended | |
| (2) | Adjusted Diluted Earnings Per Share is a non-GAAP financial measure. The Company excludes restructuring costs, acquisition-related costs,such as Business Transaction costs, integration expense and depreciation and amortization expensein 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) | Combined Quest, Atkins, and OWYNCircanaMULO++C and Company unmeasured channel estimate for the 13-weeks ending | |
| (6) | 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 The Simply Good Foods Company
The Simply Good Foods Company (Nasdaq: SMPL), headquartered in Denver, Colorado, is a consumer packaged food and beverage company with ambitious goals to raise the bar on what food can be with trusted brands and innovative nutritious snacking products. Within our portfolio of trusted brands (Quest™, Atkins™, and OWYN™), we offer a wide variety of nutritional snacks and beverages, including high protein chips, bars, ready-to-drink (RTD) shakes, and powders, and low sugar, low carb sweets and baked goods. We are a leader of the nutritious snacking movement, poised to expand our healthy lifestyle platform through innovation-driven organic growth and external investment opportunities. To learn more, visit www.thesimplygoodfoodscompany.com.
Investor Contact
Matt Siler
Vice President, Investor Relations and Treasury
The Simply Good Foods Company
msiler@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) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 123,884 | $ | 98,468 | ||||
| Accounts receivable, net | 156,067 | 164,978 | ||||||
| Inventories, net | 164,314 | 167,217 | ||||||
| Prepaid expenses | 4,432 | 7,209 | ||||||
| Other current assets | 15,441 | 15,812 | ||||||
| Total current assets | 464,138 | 453,684 | ||||||
| Long-term assets: | ||||||||
| Property and equipment, net | 42,334 | 39,738 | ||||||
| Intangible assets, net | 956,883 | 1,261,603 | ||||||
| 551,974 | 589,974 | |||||||
| Other long-term assets | 47,115 | 51,046 | ||||||
| Total assets | $ | 2,062,444 | $ | 2,396,045 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 57,025 | $ | 78,298 | ||||
| Accrued interest | 63 | 44 | ||||||
| Accrued expenses and other current liabilities | 39,690 | 46,219 | ||||||
| Total current liabilities | 96,778 | 124,561 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt, less current maturities | 397,037 | 249,066 | ||||||
| Deferred income taxes | 107,057 | 166,091 | ||||||
| Other long-term liabilities | 43,452 | 49,494 | ||||||
| Total liabilities | 644,324 | 589,212 | ||||||
| See commitments and contingencies (Note 9) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, | — | — | ||||||
| Common stock, | 1,041 | 1,037 | ||||||
| (344,670 | ) | (129,337 | ) | |||||
| Additional paid-in-capital | 1,358,758 | 1,346,687 | ||||||
| Retained earnings | 404,478 | 590,879 | ||||||
| Accumulated other comprehensive loss | (1,487 | ) | (2,433 | ) | ||||
| Total stockholders’ equity | 1,418,120 | 1,806,833 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,062,444 | $ | 2,396,045 | ||||
Consolidated Statements of Income and Comprehensive Income (Unaudited, dollars in thousands, except share and per share data) | ||||||||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||
| Net sales | $ | 356,983 | $ | 380,956 | $ | 1,023,194 | $ | 1,081,879 | ||||||||
| Cost of goods sold | 240,884 | 242,437 | 694,162 | 682,737 | ||||||||||||
| Gross profit | 116,099 | 138,519 | 329,032 | 399,142 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling and marketing | 39,173 | 33,799 | 97,017 | 101,871 | ||||||||||||
| General and administrative | 40,453 | 41,229 | 113,334 | 115,306 | ||||||||||||
| Depreciation and amortization | 4,337 | 4,171 | 13,279 | 12,479 | ||||||||||||
| Business transaction costs | — | — | — | 820 | ||||||||||||
| Loss on impairment | 82,000 | — | 331,000 | — | ||||||||||||
| Total operating expenses | 165,963 | 79,199 | 554,630 | 230,476 | ||||||||||||
| (Loss) income from operations | (49,864 | ) | 59,320 | (225,598 | ) | 168,666 | ||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 689 | 673 | 2,068 | 2,150 | ||||||||||||
| Interest expense | (5,776 | ) | (4,900 | ) | (15,895 | ) | (19,099 | ) | ||||||||
| Gain (loss) on foreign currency transactions | 1 | (337 | ) | 134 | (342 | ) | ||||||||||
| Other income | 15 | (14 | ) | 151 | 20 | |||||||||||
| Total other (expense) | (5,071 | ) | (4,578 | ) | (13,542 | ) | (17,271 | ) | ||||||||
| (Loss) income before income taxes | (54,935 | ) | 54,742 | (239,140 | ) | 151,395 | ||||||||||
| Income tax (benefit) expense | (2,963 | ) | 13,640 | (52,739 | ) | 35,424 | ||||||||||
| Net (loss) income | $ | (51,972 | ) | $ | 41,102 | $ | (186,401 | ) | $ | 115,971 | ||||||
| Other comprehensive income: | ||||||||||||||||
| Foreign currency translation, net of reclassification adjustments | 101 | 309 | 946 | (504 | ) | |||||||||||
| Comprehensive (loss) income | $ | (51,871 | ) | $ | 41,411 | $ | (185,455 | ) | $ | 115,467 | ||||||
| (Loss) earnings per share from net (loss) income: | ||||||||||||||||
| Basic | $ | (0.58 | ) | $ | 0.41 | $ | (1.99 | ) | $ | 1.15 | ||||||
| Diluted | $ | (0.58 | ) | $ | 0.40 | $ | (1.99 | ) | $ | 1.14 | ||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 89,940,680 | 100,923,690 | 93,677,801 | 100,787,087 | ||||||||||||
| Diluted | 89,940,680 | 101,635,521 | 93,677,801 | 101,669,998 | ||||||||||||
Consolidated Statements ofCash Flows (Unaudited, dollars in thousands) | ||||||||
| Thirty-Nine Weeks Ended | ||||||||
| Operating activities | ||||||||
| Net (loss) income | $ | (186,401 | ) | $ | 115,971 | |||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 18,096 | 15,480 | ||||||
| Amortization of deferred financing costs and debt discount | 491 | 1,334 | ||||||
| Stock compensation expense | 13,186 | 12,819 | ||||||
| Loss on impairment | 331,000 | — | ||||||
| Estimated credit losses | 19 | 231 | ||||||
| Unrealized (gain) loss on foreign currency transactions | (134 | ) | 342 | |||||
| Deferred income taxes | (59,034 | ) | 10,583 | |||||
| Amortization of operating lease right-of-use asset | 4,494 | 5,192 | ||||||
| Other | 4,864 | 1,063 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | 9,270 | (2,382 | ) | |||||
| Inventories, net | (864 | ) | (23,185 | ) | ||||
| Prepaid expenses | 2,753 | (1,612 | ) | |||||
| Other current assets | 434 | (783 | ) | |||||
| Accounts payable | (21,009 | ) | 12,887 | |||||
| Accrued interest | 19 | (221 | ) | |||||
| Accrued expenses and other current liabilities | (9,854 | ) | (10,788 | ) | ||||
| Other assets and liabilities | (5,160 | ) | (3,844 | ) | ||||
| Net cash provided by operating activities | 102,170 | 133,087 | ||||||
| Investing activities | ||||||||
| Purchases of property and equipment | (10,090 | ) | (2,516 | ) | ||||
| Acquisition of business, net of cash acquired | — | 1,713 | ||||||
| Investments in intangible and other assets | — | (1,389 | ) | |||||
| Net cash used in investing activities | (10,090 | ) | (2,192 | ) | ||||
| Financing activities | ||||||||
| Proceeds from option exercises | 1,056 | 11,956 | ||||||
| Tax payments related to issuance of restricted stock units and performance stock units | (2,167 | ) | (2,824 | ) | ||||
| Repurchase of common stock | (213,204 | ) | (24,338 | ) | ||||
| Principal payments of long-term debt | — | (150,000 | ) | |||||
| Proceeds from issuance of long-term debt | 150,000 | — | ||||||
| Deferred financing costs | (2,632 | ) | — | |||||
| Net cash used in financing activities | (66,947 | ) | (165,206 | ) | ||||
| Cash and cash equivalents | ||||||||
| Net increase (decrease) in cash | 25,133 | (34,311 | ) | |||||
| Effect of exchange rate on cash | 283 | (211 | ) | |||||
| Cash at beginning of period | 98,468 | 132,530 | ||||||
| Cash and cash equivalents at end of period | $ | 123,884 | $ | 98,008 | ||||
The following is a summary of revenue disaggregated by geographic area and brands:
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||
| (In thousands) | ||||||||||||
| Atkins | $ | 84,649 | $ | 112,287 | $ | 254,636 | $ | 329,105 | ||||
| Quest | 230,260 | 227,737 | 652,045 | 630,445 | ||||||||
| OWYN | 34,774 | 33,551 | 94,091 | 99,611 | ||||||||
| 349,683 | 373,575 | 1,000,772 | 1,059,161 | |||||||||
| International | 7,300 | 7,381 | 22,422 | 22,718 | ||||||||
| Total net sales | $ | 356,983 | $ | 380,956 | $ | 1,023,194 | $ | 1,081,879 | ||||
| (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 and thirty-nine weeks ended
| (In thousands) | Thirteen Weeks Ended | Thirty-Nine Weeks Ended | ||||||||||||||
| Net (loss) income | $ | (51,972 | ) | $ | 41,102 | $ | (186,401 | ) | $ | 115,971 | ||||||
| Interest income | (689 | ) | (673 | ) | (2,068 | ) | (2,150 | ) | ||||||||
| Interest expense | 5,776 | 4,900 | 15,895 | 19,099 | ||||||||||||
| Income tax (benefit) expense | (2,963 | ) | 13,640 | (52,739 | ) | 35,424 | ||||||||||
| Depreciation and amortization | 6,027 | 5,345 | 18,096 | 15,480 | ||||||||||||
| EBITDA | (43,821 | ) | 64,314 | (207,217 | ) | 183,824 | ||||||||||
| Loss on impairment | 82,000 | — | 331,000 | — | ||||||||||||
| Stock-based compensation expense | 5,559 | 4,027 | 13,186 | 12,819 | ||||||||||||
| Business transaction costs | — | — | — | 820 | ||||||||||||
| Inventory step-up | — | — | — | 1,412 | ||||||||||||
| Integration expense (1) | — | 5,226 | 10,621 | 12,112 | ||||||||||||
| Term loan transaction fees | — | — | 3,030 | 715 | ||||||||||||
| Restructuring and other costs | 13,549 | — | 18,073 | — | ||||||||||||
| Other (2) | (46 | ) | 287 | (318 | ) | 221 | ||||||||||
| Adjusted EBITDA | $ | 57,241 | $ | 73,854 | $ | 168,375 | $ | 211,923 | ||||||||
| (1) Includes one-time effects from actions taken to mitigate OWYN product quality issues. (2) 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 and thirty-nine weeks ended
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||
| Diluted (loss) earnings per share | $ | (0.58 | ) | $ | 0.40 | $ | (1.99 | ) | $ | 1.14 | ||||||
| Depreciation and amortization | 0.07 | 0.05 | 0.19 | 0.15 | ||||||||||||
| Loss on impairment | 0.91 | — | 3.53 | — | ||||||||||||
| Stock-based compensation expense | 0.06 | 0.04 | 0.14 | 0.13 | ||||||||||||
| Business transaction costs | — | — | — | 0.01 | ||||||||||||
| Inventory step-up | — | — | — | 0.01 | ||||||||||||
| Integration expense | — | 0.05 | 0.11 | 0.12 | ||||||||||||
| Term loan transaction fees | — | — | 0.03 | 0.01 | ||||||||||||
| Restructuring and other costs | 0.15 | — | 0.19 | — | ||||||||||||
| Tax effects of adjustments (1) | (0.19 | ) | (0.04 | ) | (0.95 | ) | (0.11 | ) | ||||||||
| Rounding (2) | — | 0.01 | 0.01 | — | ||||||||||||
| Adjusted diluted earnings per share | $ | 0.42 | $ | 0.51 | $ | 1.26 | $ | 1.46 | ||||||||
| (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 and thirty-nine week periods 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) | ||||
| Net Debt: | ||||
| Total debt outstanding under the Credit Agreement | $ | 400,000 | ||
| Less: cash and cash equivalents | (123,884 | ) | ||
| Net Debt as of | $ | 276,116 | ||
| Trailing twelve months Adjusted EBITDA: | ||||
| Add: Adjusted EBITDA for the thirty-nine weeks ended | $ | 168,375 | ||
| Add: Adjusted EBITDA for the fiscal year ended | 278,162 | |||
| Less: Adjusted EBITDA for the thirty-nine weeks ended | (211,923 | ) | ||
| Trailing twelve months Adjusted EBITDA as of | $ | 234,614 | ||
| Net Debt to Adjusted EBITDA | 1.2 | x | ||
