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SG

Simply Good Foods Co (SMPL)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 revenue was $369.0M, essentially in line with consensus*, while Adjusted EPS was $0.46 vs $0.47*; GAAP EPS was a loss of $0.12 driven by a $60.9M non-cash impairment of Atkins intangibles .
  • Mix was led by Quest and OWYN with retail takeaway up ~11% and ~14% respectively, while Atkins declined ~12%; gross margin fell 450 bps to 34.3% on elevated cocoa costs and tariffs .
  • FY26 outlook initiated: net sales -2% to +2%, gross margin down 100–150 bps, Adjusted EBITDA -4% to +1%, with margins expected to trough in 1H and expand in Q3–Q4 on pricing, productivity, and lower cocoa costs .
  • Capital deployment remains active: repaid $150M of debt in FY25 (total $240M repaid since OWYN deal), and increased buyback authorization by $150M; $171M remains available .

Values with * are from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Quest continued double-digit consumption growth (+11% in Q4; +12% FY) and expanded household penetration to ~19%; salty snacks consumption up 31% in Q4 and 34% FY .
  • OWYN delivered +14% Q4 and +34% FY consumption growth, with aided awareness at ~20% and significant ACV headroom; management committed to stepped-up marketing and distribution .
  • Strong cash generation and deleveraging: operating cash flow $178.5M and net debt/Adj EBITDA ~0.5x; buyback authorization raised by $150M, with $171M remaining .
  • Quote: “Quest… is our largest and highest margin brand and the innovation leader in the category” .
  • Quote: “We will lead this shift… by accelerating innovation, expanding physical availability… and breakthrough marketing” .

What Went Wrong

  • Gross margin compression (34.3%, -450 bps YoY) on elevated cocoa and tariffs; adjusted EBITDA down 14.5% YoY to $66.2M .
  • Atkins distribution losses (especially Club and Mass) and tail SKU rationalization drove declines; management expects ~20% consumption decline in FY26 for Atkins .
  • OWYN velocity slowed due to a pea protein-related quality issue affecting taste/texture on certain lots; resolved but requires incremental trade and brand investment to re-accelerate .
  • Non-cash impairment: $60.9M charge on Atkins brand/intangibles due to updated revenue projections; drove GAAP net loss of $12.4M .
  • Near-term phasing: Q1 FY26 gross margin expected ~32.5% and Q1 adjusted EBITDA down ~25% YoY before improving in 2H .

Financial Results

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$359.655 $380.956 $369.041
Gross Profit ($USD Millions)$130.137 $138.519 $126.605
Gross Margin %36.2% 36.4% 34.3%
GAAP Diluted EPS ($)$0.36 $0.40 $(0.12)
Adjusted Diluted EPS ($)$0.46 $0.51 $0.46
Adjusted EBITDA ($USD Millions)$68.001 $73.854 $66.239
Net Income ($USD Millions)$36.747 $41.102 $(12.357)
Q4 2025 Actual vs Wall Street ConsensusRevenue ($USD)EPS ($)
Actual$369,041,000 $0.46
Consensus Mean*$368,582,970*$0.47364*
Result vs Estimate*Slight beat*Slight miss*

Values with * are from S&P Global.

Brand Net Sales (Q4) ($USD Thousands)14-Weeks Ended Aug 31, 202413-Weeks Ended Aug 30, 2025
Atkins$121,131 $91,682
Quest$216,961 $233,169
OWYN$29,213 $37,409
International$8,382 $6,781
Total$375,687 $369,041
KPIs (Q4 2025)Value
Retail takeaway growth: Quest~+11%
Retail takeaway growth: OWYN~+14%
Retail takeaway growth: Atkins~-12%
Gross Margin34.3%
Adjusted EBITDA$66.2M
Net Debt / Adjusted EBITDA0.5x
Cash & Equivalents$98.5M
Capex (Q4 within FY total)$18.0M (of $20.5M FY)
Weighted Avg Diluted Shares (Q4)~101.0M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales Growth (YoY)FY 2026N/A-2% to +2% Initiated
Gross Margin (YoY)FY 2026N/ADown 100–150 bps Initiated
Adjusted EBITDA Growth (YoY)FY 2026N/A-4% to +1% Initiated
Q1 Gross Margin (YoY)Q1 FY 2026N/A~32.5% (down ~600 bps YoY) Initiated
Q1 Adjusted EBITDA (YoY)Q1 FY 2026N/ADown ~25% YoY Initiated
Q2 Adjusted EBITDA (YoY)Q2 FY 2026N/ADown high-single-digit YoY Initiated
2H FY26 PhasingFY 2026 H2N/AStronger top/bottom line; margin expansion Q3–Q4 Initiated
TariffsFY 2026N/A<2% of COGS net; blended rates slightly higher than prior expectation Updated view
Cocoa Cost CoverageFY 2026 H2N/ALower prices vs prior year; deflationary YoY in Q3–Q4 Updated view
CapexFY 2026N/A$30–$40M, mostly for salty snacks capacity Initiated
Share Repurchase AuthorizationAs of Oct 23, 2025N/A+$150M increase; $171M remaining Increased

Earnings Call Themes & Trends

TopicQ2 2025 (Prev-2)Q3 2025 (Prev-1)Q4 2025 (Current)Trend
Tariffs/MacroEarly tariff cost estimates; GM to decline ~200 bps FY25 Continued inflation/tariff headwinds; GM down 140 bps YTD Tariffs <2% of FY26 COGS net; blended rates slightly higher; 1H heavier impact Intensifying near-term, mitigants building
Cocoa InflationFavorable commodities 1H aiding margins Elevated input costs noted High-cost coverage in 1H; lower-cost coverage in 2H; potential spot favorability Improvement expected in 2H
Product Performance (Quest)Organic growth driver; innovation and marketing +11% consumption Q3; salty +31% Q4 run-rate commentary +11% Q4 consumption; salty +31% Q4; RTD milkshake launch; Bake Shop donut in Q1 FY26 Strong, broadening platforms
Product Performance (OWYN)Rapid growth; integration underway +24% consumption Q3; strong distribution gains +14% Q4; discussed quality issue, now resolved; stepped-up investments Recovering with investment
Atkins Portfolio/DistributionDeclines; planned lower marketing Continued pressure; not repeating low-ROI events Distribution rationalization; ~20% FY26 consumption decline expected; tail SKU trimming Strategically right-sizing
Supply Chain/CapacityAsset-light, agile; OWYN integration Expanding salty snacks capacity Additional salty line; $30–$40M capex FY26 to strengthen moat Scaling to demand
R&D/InnovationPipeline supporting growth Accelerated innovation pace; Overload Bars; Bake Shop New RTD milkshake; Bake Shop donuts; OWYN powders expansion; disruptive innovation ahead Accelerating
Marketing/ToneAward-winning marketing; household penetration rising Quest campaign impact; marketing up ~50% since FY23 Significant increase for OWYN and Quest; retail/media/influencers push Stepping up spend

Management Commentary

  • “Our vision is to be the scaled leader in high protein, low sugar and low carb food and beverage products…” .
  • “As we enter fiscal 2026… reduced distribution for Atkins and cost pressures from inflation and tariffs” balanced by productivity, pricing, and brand investments .
  • “We are covered on cocoa… Q3 and Q4 at rates well below prior year… presenting further potential favorability” .
  • “Quest… our largest and highest margin brand… Bake Shop line extension, high protein donut, expected to hit shelves during Q1 of fiscal 2026” .
  • “OWYN’s mission is to forge a new standard of clean… aided awareness is low at 20%… must invest more to drive awareness and build household penetration” .

Q&A Highlights

  • OWYN quality issue and recovery: Issue tied to pea protein sourcing pre-acquisition; product was safe, taste/texture impacted some lots; new stable formulation shipping since August; increased trade/marketing to restore velocities .
  • FY26 brand phasing: Quest high-single-digit growth and OWYN double-digit growth; Atkins consumption expected down ~20%; initial price elasticity heavier in 1H .
  • Club channel strategy: Q2 FY26 laps heavy merchandising; expect more consistent, spread-out club distribution rather than concentrated events .
  • Cocoa coverage detail: Cocoa mid-single-digit % of COGS; high-priced coverage in 1H; deflationary YoY in Q3/Q4; spot prices have fallen materially .
  • Capital allocation: ~$180M operating cash in FY25; comfortable leverage; ability to fund capex, buybacks, and M&A concurrently .

Estimates Context

  • Q4: Revenue slight beat vs consensus ($369.041M actual vs $368.583M*), Adjusted EPS slight miss ($0.46 vs $0.474*) .
  • Q3: In line revenue ($380.956M vs $380.945M*); Adjusted EPS slightly above ($0.51 vs $0.501*) .
  • Q2: Beat on both revenue ($359.655M vs $354.401M*) and Adjusted EPS ($0.46 vs $0.401*) .
  • FY25: Adjusted EPS modestly below consensus ($1.92 vs $1.948*), with revenue in line ($1,450.920M vs $1,450.129M*) .
  • Implication: Near-term estimate revisions likely to reflect guided GM trough in Q1, elasticity impact in 1H, and margin expansion in 2H; monitor OWYN re-acceleration trajectory and Atkins distribution normalization .

Values with * are from S&P Global.

Key Takeaways for Investors

  • Q4 was operationally solid ex-costs, but margins compressed on cocoa/tariffs; Adjusted EPS of $0.46, GAAP loss from $60.9M impairment on Atkins .
  • FY26 is a “two halves” year: expect trough margins/Q1 GM ~32.5% and Q1 adj EBITDA down ~25% YoY; margins expand in Q3–Q4 on pricing, productivity, and lower cocoa .
  • Growth engines intact: Quest and OWYN driving double-digit consumption; broadened platforms (salty, RTD, Bake Shop donuts) and stepped-up marketing support .
  • Atkins is being right-sized; near-term pain (~20% consumption decline FY26) but healthier core SKU focus should stabilize profitability longer term .
  • Balance sheet flexibility: net debt/Adj EBITDA ~0.5x, strong cash conversion, $171M buyback capacity; optionality for capacity investments and M&A .
  • Near-term trading setup: consider 1H headwinds (elasticity, tariffs, cocoa) versus likely 2H re-rating on margin expansion; watch OWYN velocity recovery and club/channel distribution cadence .
  • Consensus likely modestly trims near-term EPS but could raise 2H/FY27 as margin drivers materialize* .

Values with * are from S&P Global.

Appendix: Additional Data

FY 2025 SummaryValue
Net Sales ($USD Millions)$1,450.9
Net Income ($USD Millions)$103.6
GAAP Diluted EPS ($)$1.02
Adjusted Diluted EPS ($)$1.92
Adjusted EBITDA ($USD Millions)$278.2
Cash from Operations ($USD Millions)$178.5
Capex ($USD Millions)$20.5
Net Debt / Adjusted EBITDA0.5x
Retail Takeaway (FY 2025)Growth
Total Company~+5%
Quest~+12%
OWYN~+34%
Atkins~-10%
Selected Operating Items (Q4 2025)Detail
Operating Expenses ($USD Millions)$138.4; S&M $32.4 (-$8.4 YoY), G&A $40.6 (ex-one-timers $27.6)
Net Interest Expense ($USD Millions)$3.6 (down $4.3 YoY)
Weighted Avg Diluted Shares~101.0M

Notes: All figures are company-reported. Non-GAAP metrics (Adjusted EBITDA, Adjusted Diluted EPS, Net Debt/Adj EBITDA) follow company definitions with provided reconciliations . Values retrieved from S&P Global marked with * and presented without citations.