Simply Good Foods Q2 Earnings Top Estimates, Sales Rise 15.2% Y/Y

Core Insights - Simply Good Foods Company (SMPL) reported strong second-quarter fiscal 2025 results, with both revenue and earnings exceeding expectations and showing year-over-year growth [1][3]. Financial Performance - Adjusted earnings were 46 cents per share, surpassing the Zacks Consensus Estimate of 39 cents, and increased from 40 cents in the same quarter last year [3]. - Net sales reached $359.7 million, exceeding the Zacks Consensus Estimate of $353 million, and represented a 15.2% increase from $312.2 million in the prior year [4]. - Gross profit rose 11.4% year over year to $130.1 million, driven by organic volume growth and the addition of OWYN, although gross margin declined by 120 basis points to 36.2% [6]. Operational Highlights - Total retail takeaway increased by 7%, with Quest and OWYN brands showing significant growth of approximately 13% and 52%, respectively, while Atkins retail takeaway declined around 10% [5]. - Operating expenses totaled $75.4 million, an increase of $6.6 million compared to the same period last year [7]. - Adjusted EBITDA increased to $68 million from $57.8 million in the prior-year period [7]. Cash Flow and Debt Management - The company ended the quarter with cash of $103.7 million and an outstanding principal balance of $300 million on its term loan, having repaid $50 million in term loan debt during the quarter [8]. Future Outlook - For fiscal 2025, the company anticipates net sales growth between 8.5% and 10.5%, with OWYN net sales projected to range from $140 million to $150 million [9]. - Gross margin is expected to decline by approximately 200 basis points compared to fiscal 2024, influenced by higher input costs anticipated in the second half of the year [10]. - Adjusted EBITDA is projected to increase by 4-6% [10].