Core Viewpoint - Simply Good Foods is facing challenges with declining sales, particularly in its Atkins brand, but the return of former CEO Joe Scalzo may provide a strategic shift to reignite growth and profitability across its brands [4][10][18]. Financial Performance - In the first quarter, Simply Good Foods reported a net income of $25.3 million, a decline of over 33% [1]. - For the year ending August, the company generated net sales of $1.45 billion, reflecting a 9% increase year-over-year, but net income fell to $103.6 million from $139.3 million due to a $60.9 million impairment on the Atkins brand [3]. Brand Performance - The first quarter saw a 0.3% decline in net sales, attributed to lower sales from Atkins and OWYN, with the latter facing a "product quality issue" [2]. - Quest accounted for 67% of net sales, OWYN at 9%, and Atkins down to 27% after several quarters of decline [11]. Leadership Changes - Joe Scalzo is returning as CEO to replace Geoff Tanner, which analysts view positively due to his familiarity with the company and its brands [6][10]. - Scalzo's previous tenure included significant growth for Atkins, and his return is seen as a potential boost for the brand [19]. Strategic Focus - Analysts expect Scalzo to focus on maintaining momentum for Quest and OWYN while right-sizing the Atkins business, which now represents less than 30% of total sales [12]. - The company is working to modernize the Atkins brand and shift shelf space to more productive products [9]. Market Context - The rise of GLP-1 medications presents an opportunity for Atkins, as the company is conducting studies on the benefits of its products for users of these drugs [13][15]. - There is a belief that Scalzo's leadership could help Atkins regain relevance in a market increasingly influenced by dietary changes associated with GLP-1 usage [18][19].

This story was originally published on Food Dive. To receive daily news and insights, subscribe to our free daily Food Dive newsletter. Dive Brief: Simply Good Foods said Joe Scalzo will return as its president and CEO as the Atkins and Quest owner looks to improve profitability.  Scalzo, who formerly held the top executive role from 2017 to 2023, is assuming the position immediately. He succeeds Geoff Tanner, who joined Simply Good Foods after a nearly seven-year tenure at J.M. Smucker. The protein sh ...

Group 1 - The Simply Good Foods Company has re-appointed Joe Scalzo as CEO, effective immediately, to focus on growth and profitability [1][2] - In the fiscal year ending August, the company reported net sales of $1.45 billion, a 9% increase year-over-year, but net income decreased to $103.6 million from $139.3 million [2] - The company experienced a 0.3% decline in first-quarter net sales to $340.2 million, with net income falling over a third to $25.3 million [3] Group 2 - Chairman James Kilts praised Scalzo as a visionary and key architect of the business, expressing confidence in his leadership to drive growth and create value for shareholders [4] - The company forecasts a potential 2% increase in net sales for the current financial year, but also warns of a possible 2% decline [4] - Annual adjusted EBITDA is projected to increase by 1% at best or decrease by 4% at worst [5] Group 3 - Scalzo expressed enthusiasm about returning to Simply Good Foods, emphasizing a mission to secure leadership in innovation and product quality [6]

Group 1 - Simply Good Foods (NASDAQ:SMPL) is recognized as a promising mid-cap consumer staples stock priced under $100, with a recent Buy rating reaffirmed by Bernstein SocGen and a target price increase from $29 to $31, indicating a potential upside of nearly 45% [1] - Analyst Alexia Burland Howard highlighted that the consensus topline growth forecasts do not align with U.S. scanner sales data, noting weaknesses in Atkins products but positive growth in brands like Quest and OWYN, which together account for about 50% of the product portfolio and have shown growth in the high-teens over the past year [2] - Deutsche Bank analyst Stephen Powers maintained a neutral stance on Simply Good Foods, assigning a Hold rating and lowering the target price from $26 to $22, suggesting a flat growth potential in share price of approximately 3% [3] Group 2 - Simply Good Foods develops and sells a variety of packaged food, nutritional snacks, and beverages under brands such as Quest and Atkins, utilizing a robust network of retail and e-commerce platforms for distribution [4]

Core Thesis - The growth of Simply Good Foods' Quest and OWYN brands is expected to compensate for the decline of its Atkins brand [1] Company Overview - Simply Good Foods focuses on the food manufacturing sector, particularly in the health and wellness segment [1] Brand Performance - The Quest and OWYN brands are anticipated to drive growth, offsetting the weakening performance of the Atkins brand [1]

Core Insights - Simply Good Foods Company (SMPL) reported first-quarter fiscal 2026 results with both revenue and earnings exceeding Zacks Consensus Estimates, although both metrics declined year over year [1][9] - Management maintained its full-year outlook, indicating a path toward margin improvement in the second half of the fiscal year [1][15] Quarterly Performance - Adjusted earnings were 39 cents per share, surpassing the Zacks Consensus Estimate of 36 cents, but down from 49 cents in the same quarter last year [2] - Net sales reached $340.2 million, beating the Zacks Consensus Estimate of $337 million, but decreased by 0.3% from $341.3 million year-over-year [3] - North America revenues were $331.8 million, reflecting a modest decline of 0.2% year-over-year, while international sales were $8.4 million, down 5.7% [4] Brand Performance - Quest brand grew by 9.6%, while Atkins and OWYN experienced declines of 16.5% and 3.3%, respectively, with OWYN's performance affected by product quality issues and high retailer inventory levels [3][4] Margins and Expenses - Gross profit was $109.9 million, down 15.8% year-over-year, with a gross margin of 32.3%, a decrease of 590 basis points [5] - Operating expenses decreased by 4.7% to $72.3 million, with selling and marketing expenses down 10.1% to $29.7 million [6] - Adjusted EBITDA was $55.6 million, down 20.6% year-over-year, with an adjusted EBITDA margin of 16.4%, a decline of 410 basis points [7] Financial Position - At the end of Q1, the company reported cash of $194.1 million and a term loan balance of $400 million, resulting in a net debt to adjusted EBITDA ratio of 0.8x [8] - Operating cash flow improved to $50.1 million from $32 million last year, driven by working capital improvements [8] Future Expectations - The second quarter is expected to be the weakest for fiscal 2026, with net sales anticipated to decline between 3.5% and 4.5% year-over-year [11] - Gross margin for Q2 is expected to decline approximately 300 basis points year-over-year, with adjusted EBITDA anticipated to decline by double digits [12] - For the full fiscal year 2026, net sales growth is projected to range from negative 2% to positive 2%, with expectations for margin recovery in the second half [15][17]

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]

Financial Data and Key Metrics Changes - The company reported net sales of $340.2 million for Q1, which was essentially flat compared to the previous year [20] - Adjusted EBITDA was $55.6 million, down 20.6% year-over-year due to margin pressures [23] - Gross profit declined 15.8% to $109.9 million, primarily driven by elevated inflationary costs [21] - Net income was $25.3 million, a decline of 34% compared to last year [23] - Diluted earnings per share decreased to $0.26 from $0.38 in the year-ago period [23] Business Line Data and Key Metrics Changes - Quest brand net sales grew nearly 10%, driven by robust consumption growth of 12% [20] - Atkins consumption declined 19%, primarily due to lost distribution at key retailers [13] - OWYN's consumption increased by 18%, benefiting from distribution-led growth [16] Market Data and Key Metrics Changes - The nutritional snacking category grew 10%, with Quest and OWYN contributing significantly to this growth [5] - Household penetration for Quest reached nearly 20%, up 200 basis points year-over-year [9] - OWYN's household penetration increased to 4.5%, up 100 basis points [16] Company Strategy and Development Direction - The company is focused on driving top-line growth through expanded distribution and marketing, particularly for Quest and OWYN [5] - A robust productivity program initiated 18 months ago is expected to yield results in the second half of the fiscal year [7] - The company is strategically working with retail partners to optimize the assortment for Atkins, focusing on more productive SKUs [14] Management's Comments on Operating Environment and Future Outlook - Management remains confident in the full-year outlook for net sales and Adjusted EBITDA despite challenges in the first half [5] - The company expects Q2 to be the weakest quarter for consumption and net sales growth, with a forecasted decline of 3.5%-4.5% [29] - Management anticipates stronger growth in the second half of the fiscal year, driven by distribution gains and new product innovations [30] Other Important Information - The company has repurchased over 7% of its common stock since the start of the fiscal year, reflecting confidence in long-term growth [8] - The board authorized a $200 million increase to the existing share repurchase program [26] - The company is investing heavily in marketing and brand building to support ongoing demand [18] Q&A Session Summary Question: Can you elaborate on the confidence in the back half inflection and key risks? - Management indicated that the second half is expected to benefit from new distribution and merchandising gains, with confidence in improved gross margins and profit growth [38][39] Question: What needs to be done on the legacy bar business? - Management acknowledged the flat performance of Quest Bars and outlined a multi-pronged plan to re-accelerate growth, including innovation and improved merchandising [46] Question: How should we judge the step-up in marketing investment for OWYN? - Management emphasized the relationship between household penetration and brand awareness, indicating significant upside potential for OWYN [50][51] Question: What is the current status of the Atkins business? - Management noted that two-thirds of declines in Atkins are due to lost distribution, with plans to optimize the assortment by replacing underperforming SKUs [82] Question: When will tariff relief be seen? - Management expects tariff benefits to start flowing in the second half of the year, alongside cocoa cost benefits [88] Question: What is the company's view on M&A and capital allocation? - Management remains open to M&A opportunities but currently sees share repurchases as the best use of cash given the undervalued stock price [92]

Financial Data and Key Metrics Changes - The company reported net sales of $340.2 million for Q1 2026, which was essentially flat compared to the previous year [18] - Adjusted EBITDA was $55.6 million, down 20.6% year-over-year due to margin pressures [22] - Gross profit declined 15.8% to $109.9 million, primarily driven by elevated inflationary costs [19] - Net income was $25.3 million, a decline of 34% compared to the previous year [22] - Diluted earnings per share decreased to $0.26 from $0.38 in the year-ago period [22] Business Line Data and Key Metrics Changes - Quest brand net sales grew nearly 10%, driven by robust consumption growth of 12% [18] - Atkins consumption declined 19%, largely due to lost distribution at key retailers [12] - OWYN's consumption increased by 18%, benefiting from distribution-led growth [15] - The salty snacks business saw a 40% increase in consumption, reflecting distribution gains and velocity growth [9] Market Data and Key Metrics Changes - The nutritional snacking category grew by 10% in Q1, supporting overall company growth [4] - Household penetration for Quest reached nearly 20%, up 200 basis points year-over-year [8] - OWYN's household penetration increased to 4.5%, up 100 basis points [15] Company Strategy and Development Direction - The company is focused on driving top-line growth through expanded distribution and marketing initiatives [4] - A robust productivity program initiated 18 months ago is expected to yield results in the second half of the fiscal year [5] - The company plans to continue investing in marketing and innovation to support growth, particularly for Quest and OWYN [17] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed confidence in the full-year outlook for net sales and Adjusted EBITDA despite challenges in the first half [4] - The second half of the fiscal year is expected to show stronger performance, with anticipated improvements in gross margins and profitability [27] - Management acknowledged risks related to pricing elasticities and lingering product quality issues impacting OWYN [16] Other Important Information - The company borrowed an additional $150 million to accelerate its share buyback program, repurchasing over 7% of its common stock since the start of the fiscal year [6][7] - The board authorized a $200 million increase to the existing share repurchase program, reflecting confidence in long-term growth [25] Q&A Session Summary Question: Can you elaborate on the confidence in the back half inflection and key risks? - Management indicated that the second half is expected to benefit from new distribution and merchandising gains, with confidence in improved gross margins and productivity [32][34] Question: What needs to be done on the legacy bar business? - Management acknowledged the need for a multi-pronged plan to re-accelerate the bar business, including innovation and improved merchandising [36][37] Question: How should we judge the step-up in marketing investment for OWYN? - Management emphasized the importance of increasing marketing, innovation, and distribution to drive household penetration for OWYN [39][40] Question: What is the current status of the Atkins business? - Management noted that two-thirds of Atkins' declines are due to lost distribution, but there is optimism about flowback and improving velocity in the future [52][53] Question: When will tariff relief be seen? - Management expects tariff benefits to start flowing in during the second half of the year, alongside cocoa cost benefits [55]

Financial Performance & Outlook - Q1 2026 net sales were $340.2 million, a slight decrease of 0.3% year-over-year[33] - Q1 2026 adjusted EBITDA decreased by 20.6% year-over-year to $55.6 million[37] - The company reaffirms its fiscal year 2026 outlook for net sales, projecting a range of -2% to +2%[11] - The company reaffirms its fiscal year 2026 outlook for adjusted EBITDA, projecting a range of -4% to +1%[11] - Gross margin for fiscal year 2026 is expected to decline by -150 to -100 basis points[44] Brand Performance - Quest and OWYN accounted for 71% of the company's Q1 net sales and grew aggregate consumption by 13%[11] - Quest Q1 retail takeaway grew 12%[13] - Atkins Q1 retail takeaway declined 19%[18] - OWYN Q1 retail takeaway grew 18%[25] Capital Allocation - The company repurchased approximately 7% of its outstanding shares through January 6, 2026, totaling nearly $150 million[11] - An additional share repurchase authorization of $200 million was announced, leaving approximately $224 million available as of January 6, 2026[12]