Overview

• U.S. nutritional snacking firm's Q3 revenue fell 6% but beat analyst expectations

• Adjusted EPS for Q3 beat consensus despite lower yr/yr performance

• Sales decline driven by Atkins distribution losses, partly offset by Quest and OWYN growth

Outlook

• Simply Good Foods sees FY26 net sales between $1.345 bln and $1.355 bln, down 7%-6% y/y

• Company expects FY26 gross margins to decline about 375 basis points y/y

• Simply Good Foods expects Q4 net sales of $322 mln to $332 mln, down 13%-10% y/y

Result Drivers

• ATKINS DECLINE - Sales drop was driven by a 24.6% decline in Atkins brand, mainly due to distribution losses and softer retail takeaway

• HIGHER INPUT AND RESTRUCTURING COSTS - Gross profit and margin fell due to volume declines, higher input costs, and $6.2 mln in restructuring costs

• BRAND INVESTMENT - Selling and marketing expenses rose 15.9% as company invested in selling capability and brand support for long-term growth

Company press release: ID:nGNXbf5lz6

Key Details

Metric	Beat/Miss	Actual	Consensus Estimate
Q3 Revenue	Beat	$357 mln	$332.66 mln (10 Analysts)
Q3 Adjusted EPS	Beat	$0.42	$0.35 (8 Analysts)
Q3 Net Income		-$52 mln
Q3 Gross Margin		32.5%

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 4 "strong buy" or "buy", 7 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the food processing peer group is "buy"

• Wall Street's median 12-month price target for Simply Good Foods Co is $14.00, about 9% above its July 8 closing price of $12.84

• The stock recently traded at 7 times the next 12-month earnings vs. a P/E of 7 three months ago

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