The Simply Good Foods Company (NASDAQ:SMPL) has reported a modest increase in net sales and adjusted EBITDA for the fiscal first quarter of 2024. The company's President and CEO, Geoff Tanner, and CFO, Shaun Mara, provided insights into the financial outcomes and strategic initiatives during the earnings call. Key financial highlights included a 2.6% rise in net sales to $308.7M, primarily fueled by the Quest brand's continued growth, and a gross margin standing firm at 37.3%. The company's adjusted EBITDA saw a slight uptick of 2%, reaching $62M. Simply Good Foods also reaffirmed its full-year fiscal outlook for 2024, expressing confidence in the Quest brand potentially reaching estimated retail sales of $1B and maintaining a steady performance for the Atkins brand.
Key Takeaways
- Net sales increased by 2.6% to $308.7M, largely driven by the Quest brand.
- Gross margin remained stable at 37.3%, in line with expectations.
- Adjusted EBITDA rose by 2% to $62M.
- The Quest brand is expected to hit estimated retail sales of $1B in fiscal 2024.
- The Atkins brand experienced stable retail takeaway.
- The company remains focused on a five-point revitalization plan for the Atkins brand.
- Cash on hand was $121.4M, with $47.5M generated from operations.
- $35M of term loan debt was repaid, with $25M repaid post-quarter.
- Net sales growth is projected to be at the high end of the 4% to 6% range for fiscal 2024.
- Adjusted EBITDA and adjusted diluted EPS are expected to increase slightly more than net sales growth.
- The company is exploring various capital allocation strategies including debt repayment, share repurchases, M&A, and dividends.
Company Outlook
- Shipments and consumption in the nutritional snacking category are anticipated to align in the first half of fiscal 2024.
- Net sales growth is expected to be at the higher end of the long-term algorithm for fiscal 2024.
- The company is invested in revitalizing the Atkins brand, a process expected to take 12 to 18 months.
Bearish Highlights
- Selling and marketing expenses rose by 12.1% due to increased advertising costs.
- Atkins brand's innovation has lagged compared to Quest, with a focus on strengthening the core before expanding.
Bullish Highlights
- Quest brand's strong performance is a significant growth driver.
- Growth in the nutritional snacking category is consistent, with opportunities to increase product space and leverage marketing.
- The company is confident in its "new year, new you" plans and sees potential for growth in both household penetration and buy rate.
Misses
- No specific misses were discussed in the provided summary.
Q&A Highlights
- The company plans to enhance investments in marketing, innovation, and category management.
- There is a potential for category growth driven by protein snacks' popularity, especially among younger consumers.
- M&A opportunities are being considered, with a keen interest in understanding the GLP-1 market.
In conclusion, The Simply Good Foods Company has started fiscal 2024 on a solid note, with the Quest brand being a standout performer. The company's commitment to the Atkins brand's revitalization and strategic marketing investments positions it for potential growth in the expanding nutritional snacking market. The next earnings call is scheduled for April, where further developments, especially regarding the Atkins brand's progress and Quest's category expansion, will be discussed.
InvestingPro Insights
The Simply Good Foods Company (SMPL) has demonstrated a steady financial performance in the first quarter of fiscal 2024, which is further underscored by real-time data and analysis available from InvestingPro. One of the key InvestingPro Tips for SMPL is its consistently increasing earnings per share, which is indicative of the company's growing profitability and may be a positive sign for investors looking at long-term value.
In terms of real-time financial metrics, SMPL has a Market Cap of approximately $4.1B, reflecting a substantial presence in the nutritional snacking sector. The company trades at a P/E Ratio of 31.36, which suggests a premium valuation compared to near-term earnings growth, an aspect that investors may want to consider when evaluating the stock's current price levels. Moreover, the revenue growth over the last twelve months as of Q1 2024 stands at 5.23%, reinforcing the modest sales increase reported in the earnings call.
InvestingPro subscribers can access an additional 9 InvestingPro Tips for SMPL, which include insights such as the company's moderate level of debt and its strong returns over various time frames, including the last three months, five years, and the last decade. These tips can provide a more comprehensive understanding of the company's financial health and market performance.
For those interested in delving deeper into SMPL's financials and future prospects, InvestingPro is now offering a special New Year sale with discounts of up to 50%. Additionally, you can use the coupon code sfy24 to get an extra 15% off a 2-year InvestingPro+ subscription, granting access to exclusive insights and advanced analytical tools to aid in informed investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.