Simply Good Foods 2025 Q3 Earnings Stable EPS Amid Slight Net Income Decline

Simply Good Foods (SMPL) reported its fiscal 2025 Q3 earnings on Jul 10th, 2025.

The company’s results were mixed, with revenue surpassing expectations due to a 13.8% year-over-year increase. However, net income showed a slight decline. Simply Good Foods adjusted its FY 2025 guidance, projecting net sales growth between 8.5% and 9.5%, and adjusted EBITDA growth of 4-5%, aligning with expectations. The guidance reflects a strategic focus on volume-driven organic growth amidst ongoing inflation challenges.

Revenue
Simply Good Foods experienced a notable rise in total revenue to $380.96 million for 2025 Q3, marking a 13.8% increase from the prior year. The Atkins segment generated $112.29 million, while Quest saw significant contributions with $227.74 million. The OWYN acquisition added $33.55 million, driving growth. Revenue from Total North America was $373.57 million, underscoring strong regional performance.

Earnings/Net Income
Simply Good Foods maintained a consistent EPS of $0.41 in 2025 Q3, matching the previous year's performance. The company's net income experienced a slight decline to $41.10 million, a 0.6% decrease from $41.33 million in 2024 Q3. The stable EPS reflects resilience amidst slight net income reduction.

Post-Earnings Price Action Review
The strategy of purchasing Simply Good Foods shares 30 days post-earnings release, following consistent quarter-over-quarter revenue growth across the past three years, yielded moderate returns but posed significant volatility and risk. The strategy achieved a compound annual growth rate (CAGR) of 10.05%, underperforming the benchmark by 24.00%. Despite this, it faced a maximum drawdown of -34.27% and a Sharpe ratio of 0.31, indicating a challenging risk-return profile. Such metrics highlight the necessity of effective risk management in navigating the stock's inherent volatility, emphasizing the importance of strategic caution for investors considering this approach.

CEO Commentary
Geoff E. Tanner, CEO, President & Director, expressed optimism about Simply Good Foods’ Q3 performance, noting “momentum continued” with net sales up 14% year-over-year, driven by the OWYN acquisition and 4% organic growth. He acknowledged challenges from inflation impacting margins and emphasized the company's commitment to productivity and cost management. Tanner highlighted the robust growth in the Nutritional Snacking category, stating, “Simply Good is at the forefront of this generational shift.” He reinforced the strategy to optimize the Atkins brand while driving growth through innovation in the Quest and OWYN brands, reflecting confidence in their ability to deliver sustainable growth.

Guidance
For fiscal year 2025, Simply Good Foods expects total company net sales to increase by 8.5% to 9.5%, with organic growth primarily driven by volume. OWYN net sales are projected to reach approximately $145 million. Adjusted EBITDA is anticipated to grow by 4% to 5%, factoring in a projected gross margin decline of 200 basis points for the full year. In Q4, the company forecasts organic net sales growth around 3% at the midpoint, while gross margin pressures are expected to persist due to inflation and tariffs, leading to a low double-digit decline in adjusted EBITDA at the midpoint.

Additional News
Simply Good Foods recently made significant strides in reducing its net debt, leading to a low leverage ratio of 0.5x. The company effectively managed its financials by repaying $50 million in debt during Q3, reflecting a proactive approach to strengthening its balance sheet. Additionally, Simply Good Foods announced a strategic initiative to enhance its brand portfolio, focusing on innovation within the Quest and OWYN brands to capture market share in the growing Nutritional Snacking category. Furthermore, the company maintained its strong cash position with $98 million, underscoring its financial stability and capacity for future investments.