Simply Good Foods Q1 Earnings Call Highlights

Core Insights - Simply Good Foods reported a decline in profitability due to higher costs, with adjusted EBITDA at $55.6 million, down 20.6% year-over-year, and net income at $25.3 million compared to $38 million a year ago [1][2][4] Financial Performance - Net sales for the quarter ended November 29, 2025, were $340.2 million, essentially flat compared to the prior year [3][7] - Gross profit was $109.9 million, down 15.8%, with a gross margin of 32.3%, down 590 basis points [2][7] - Adjusted diluted EPS was $0.39, compared to $0.49 in the prior-year quarter [1] Brand Performance - Quest brand drove growth with nearly 10% net sales growth and 12% consumption growth, representing 71% of net sales [3][6][8] - OWYN saw 18% consumption growth but faced challenges with net sales due to product quality issues and retailer inventory levels [11] - Atkins experienced a 19% decline in consumption, primarily due to lost distribution at key retailers [10] Cost and Margin Pressures - The decline in gross margin was attributed to inflationary input costs, particularly cocoa, and the impact of tariffs totaling about $4 million [2][12] - Management emphasized actions to rebuild gross margin, with recent pricing actions expected to provide limited benefits in the near term [12][14] Capital Allocation - The company accelerated share buybacks, borrowing an additional $150 million to repurchase shares, totaling over 7% of shares outstanding [5][19] - An additional $200 million was added to the share repurchase authorization, with approximately $224 million remaining under the current program [20] Outlook - Simply Good Foods reaffirmed its fiscal 2026 guidance, expecting Q2 to be the weakest quarter, with net sales projected to decline 3.5% to 4.5% year-over-year [16][17] - Management anticipates a stronger second half, with net sales growth moving toward the higher end of the full-year range [17][18]