Earnings and Revenue Top Forecasts
Simply Good Foods Company (NASDAQ:SMPL) shares surged nearly 16% in pre-market trading on Thursday after the nutritional snacking company reported third-quarter results that exceeded Wall Street expectations.
Adjusted earnings came in at $0.42 per share, comfortably ahead of analysts’ forecast of $0.35. Revenue reached $357.0 million, surpassing the consensus estimate of $332.91 million.
Sales Decline but Results Beat Internal Expectations
Quarterly revenue fell 6.3% from $381.0 million in the same period last year, reflecting a 24.6% decline in Atkins sales. Growth from the Quest and OWYN brands partially offset the weakness, with sales rising 1.1% and 3.6%, respectively.
Management said the decline primarily reflected previously anticipated distribution losses for Atkins products and softer retail demand.
“Our third quarter results reflect initial steps against the turnaround priorities we outlined last quarter,” said Joe Scalzo, President and Chief Executive Officer. “We delivered third quarter net sales of $357 million and Adjusted EBITDA of $57 million, ahead of our expectations, with performance supported in part by the early effect of select cost actions we announced last quarter.”
Impairment Charge Weighs on Bottom Line
The company reported a net loss of $52.0 million, or $0.58 per diluted share, compared with net income of $41.1 million, or $0.40 per diluted share, a year earlier.
The loss was largely driven by an $82.0 million non-cash impairment charge related to goodwill and brand intangible assets, which the company said primarily reflected declines in its share price.
Gross margin narrowed by 390 basis points to 32.5%, impacted by $6.2 million in restructuring costs as well as higher input expenses.
Full-Year Outlook Raised
Simply Good Foods reaffirmed confidence in its full-year outlook, forecasting fiscal 2026 revenue of between $1.345 billion and $1.355 billion.
The midpoint of that range, $1.35 billion, is above analysts’ consensus forecast of $1.334 billion.
However, the company’s fourth-quarter revenue guidance of $322 million to $332 million fell short of Wall Street expectations, with the midpoint remaining below the consensus estimate of $335.3 million.