Simply Good Foods Q2 2023 Earnings Report
Key Takeaways
Simply Good Foods reported second quarter 2023 financial results, with net sales of $296.6 million, net income of $25.6 million, and EPS of $0.25. The company reaffirmed its full year net sales outlook, expecting an increase slightly greater than its long-term algorithm of 4-6%.
Net sales were $296.6 million, about the same as the year ago period.
Net income was $25.6 million, compared to $18.5 million for the comparable period of fiscal year 2022.
Earnings per diluted share were $0.25 versus $0.18 in the year ago period.
Adjusted EBITDA was $50.9 million versus $54.2 million in the year ago period.
Simply Good Foods
Simply Good Foods
Forward Guidance
The Company anticipates net sales to increase slightly greater than the 4-6% long-term algorithm. Full fiscal year 2023 gross margin will decline greater than our previous estimate due to the year-to-date gross margin performance, and slightly higher costs within our supply chain over the remainder of the year, with most of the headwind in the third quarter. Full fiscal year 2023 Adjusted EBITDA to increase, but slightly less than the net sales growth rate; and, Adjusted Diluted EPS to increase less than the Adjusted EBITDA growth rate due to the Company’s expectation of higher interest expense from an increase in the variable interest rate related to its term loan debt, partially mitigated by fewer shares outstanding.
Positive Outlook
- Net sales to increase slightly greater than the 4-6% long-term algorithm.
- Company has solid plans in place for both the Atkins and Quest brands, including, innovation, advertising, customer programming and display that the Company anticipates will drive sales and earnings growth, particularly in the fourth quarter of fiscal 2023.
- Company believes it is well positioned to maintain its marketplace momentum.
- Company has a portfolio of brands aligned with consumer mega-trends of both health and wellness, convenience and on-the-go nutrition.
- SG&A expenses to be slightly lower than last year.
Challenges Ahead
- Headwind of almost 1 percentage point related to the previously discussed agreement to license the Quest frozen pizza business.
- Full fiscal year 2023 gross margin will decline greater than our previous estimate due to the year-to-date gross margin performance, and slightly higher costs within our supply chain over the remainder of the year, with most of the headwind in the third quarter.
- Adjusted EBITDA to increase, but slightly less than the net sales growth rate.
- Adjusted Diluted EPS to increase less than the Adjusted EBITDA growth rate due to the Company’s expectation of higher interest expense from an increase in the variable interest rate related to its term loan debt, partially mitigated by fewer shares outstanding.
- Challenging macroeconomic environment.