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Simply Good Foods
🇺🇸 NASDAQ:SMPL
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May 30, 2020

Simply Good Foods Q3 2020 Earnings Report

Simply Good Foods' third quarter performance was significantly impacted by COVID-19 factors, resulting in changes in shopping and consumption behavior, with net sales increasing by 54.2% due to the Quest acquisition and legacy Atkins net sales declining by 8.3%.

Key Takeaways

Simply Good Foods reported a 54.2% increase in net sales for the third quarter, driven by the acquisition of Quest. However, Legacy Atkins net sales declined by 8.3%, offset by e-commerce growth. Adjusted EBITDA increased by 74.2% due to the inclusion of Quest.

Net sales increased 54.2%, reaching $215.1 million.

Gross profit margin increased by 60 basis points to 41.2%.

Net income was $16.4 million, compared to $13.5 million in the previous year.

Adjusted EBITDA increased 74.2% to $43.4 million, primarily due to the Quest acquisition.

Total Revenue
$215M
Previous year: $139M
+54.2%
EPS
$0.26
Previous year: $0.16
+62.5%
Adjusted EBITDA
$43.4M
Previous year: $24.9M
+74.3%
Gross Profit
$88.6M
Previous year: $56.7M
+56.4%
Cash and Equivalents
$111M
Previous year: $248M
-55.1%
Free Cash Flow
$38.7M
Previous year: $30.9M
+25.2%
Total Assets
$2.04B
Previous year: $1.12B
+81.4%

Simply Good Foods

Simply Good Foods

Forward Guidance

Simply Good Foods anticipates full-year 2020 net sales of $790-800 million and Adjusted EBITDA of $145-150 million, assuming U.S. movement restrictions remain at the current levels. The Company anticipates 2020 Adjusted Diluted Earnings Per Share to be in the range of $0.86 to $0.90.

Positive Outlook

  • Marketplace trends of products have improved sequentially as movement restrictions eased.
  • Increase in consumption is due to increasing brand relevance among consumers.
  • Increase in consumption is due to increased shopping trips.
  • Increase in consumption is due to more on-the-go consumption.
  • Company stepped-up marketing and merchandising investments in brands.

Challenges Ahead

  • Full-year 2020 net sales of $790-800 million and Adjusted EBITDA of $145-150 million is assumed that U.S. movement restrictions remain at the current levels
  • Legacy Atkins net sales and Adjusted EBITDA is expected to be about the same as the year ago period, including the headwind of a fifty-third week in fiscal year 2019.
  • The company estimates that the extra week included in fiscal year 2019 is a headwind to year-over-year comparisons of reported legacy Atkins net sales growth in fiscal 2020 of about 2 percentage points.
  • The Company anticipates 2020 Adjusted Diluted Earnings Per Share to be in the range of $0.86 to $0.90 versus $0.77 in 2019.
  • ERP implementation costs ramp-up in the fourth quarter.

Company Overview

Full financial data and analysis

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