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    SMPL
    Earnings call· May 2026(Q3 FY26)

    Simply Good Foods Q3 FY26 earnings call SMPL

    Jul 9, 2026 Source

    Executive summary

    The Simply Good Foods Company Q3 FY26 — Turnaround Progress Amidst Declining Sales and Margins

    The Simply Good Foods Company is in the early stages of a turnaround, with Q3 FY26 results ahead of expectations despite overall declines. The company is focused on strengthening business economics, improving execution, and rebuilding brand investment, with early signs of progress in organizational focus and accountability. Management is addressing execution-driven challenges in an attractive category, aiming to restore profitable growth and sustainable brand health.

    Highlights

    4

    • Quest net sales grew 1.1% and OWYN net sales grew 3.6%, both exceeding expectations.

    • Quest household penetration increased 120 basis points year over year to 20.5%.

    • Quest chips consumption grew over 17% in the quarter, with household penetration at approximately 11%.

    • The company repurchased approximately 2 million shares in Q3, totaling $213 million this fiscal year.

    Concerns

    5

    • Net sales declined 6.3% to $357 million.

    • Gross margin declined 390 basis points to 32.5%.

    • Adjusted EBITDA declined 22.5% to $57.2 million.

    • Atkins net sales declined 24.6% due to declining household penetration and insufficient marketing support.

    • Company-wide retail takeaway declined 6.7%, while the purposeful nutrition category grew 10%.

    Guidance & targets

    8
    CategoryTargetConfidence
    Fiscal Year 2026 Net Sales
    $1.345 billion to $1.355 billion
    high materiality
    High
    Fiscal Year 2026 GAAP Gross Margin Decline
    roughly 375 basis points decline
    high materiality
    High
    Fiscal Year 2026 Adjusted EBITDA
    $220 million to $225 million
    high materiality
    High
    Fiscal Year 2026 Effective Tax Rate
    roughly 25%
    medium materiality
    High
    Fiscal Year 2026 Capital Expenditures
    $25 million to $30 million
    medium materiality
    High
    Q4 FY26 Net Sales
    $322 million to $332 million
    high materiality
    High
    Q4 FY26 Adjusted EBITDA
    $52 million to $57 million
    high materiality
    High
    Price Increase
    high single-digit
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Quest
    Quest remains the largest brand and most important growth engine. Household penetration continues to expand, demonstrating brand relevance. Chips and milkshakes are performing well, but bar business performance is not satisfactory, impacted by innovation and marketing.
    Retail Takeaway Growth: 1.4%Retail Takeaway Growth (prior quarter): 2.4%Household Penetration: 20.5%Household Penetration YoY Change: +120 bpsChips Consumption Growth: >17%Chips Household Penetration: ~11%Milkshake Segment Growth: ~50%
    		—1.1%——
    Atkins
    Declining household penetration and distribution losses are the main drivers of decline. The brand has not received proper marketing support. Focus is on resetting retail baseline and managing more disciplined.
    Retail Takeaway Decline: 23.9%Retail Takeaway Decline (prior quarter): 23.4%Household Penetration: 8.5%Household Penetration YoY Change: -220 bps
    		—-24.6%——
    OWYN
    Performance negatively impacted by a product quality issue and ineffective marketing execution, leading to expected distribution losses. Long-term potential is still believed, with a focus on core ready-to-drink and powder business.
    Retail Takeaway Decline: 1.3%Retail Takeaway Decline (prior quarter): 2.4%Household Penetration: 4.3%Household Penetration YoY Change: flat
    		—3.6%——

    Operational metrics

    21
    Net Sales
    $357M-6.3% YoY
    Q3 FY26

    Came in ahead of expectations, but overall performance remains well below where the business should perform.

    Adjusted EBITDA
    $57.2M-22.5% YoY
    Q3 FY26

    Declined meaningfully versus the prior year.

    Gross Profit
    $116.1M-16.2% YoY
    Q3 FY26

    Driven by volume declines, higher input costs, and one-time restructuring costs to streamline operations.

    Gross Margin
    32.5%-390 bps YoY
    Q3 FY26

    Due to higher input and restructuring costs.

    Gross Margin
    34.3%-210 bps YoY
    Q3 FY26

    Exceeded forecast driven by productivity initiatives.

    Selling and Marketing Expenses
    $39.2M+15.9% YoY
    Q3 FY26

    Driven by investments in selling capability and increased spend to support longer-term brand growth.

    G&A Expenses
    $40.5M-1.9% YoY
    Q3 FY26
    G&A Expenses (Adjusted)
    $34.2M-5% YoY
    Q3 FY26

    Principally due to the impact of lower employee costs.

    Operating Loss (GAAP)
    $49.9Mvs $59.3M income YoY
    Q3 FY26

    Primarily due to the non-cash loss on impairment of $82 million related to Goodwill and the Atkins and OWYN brand intangible assets.

    Net Interest Expense
    $5.1M
    Q3 FY26
    Effective Tax Rate
    5.4%
    Q3 FY26
    Net Loss (GAAP)
    $52Mdown from $41.1M income YoY
    Q3 FY26

    Due to the impairment of Goodwill and brand intangible assets.

    Cash Balance
    $123.9M
    Q3 FY26 end
    Term Loan Outstanding Principal
    $400M
    Q3 FY26 end
    Net Debt to Trailing 12-Month Adjusted EBITDA
    1.2x
    Q3 FY26 end (trailing 12-month)
    Shares Repurchased
    2M
    Q3 FY26
    Shares Repurchased
    $240M
    Trailing 12 months

    Including approximately $213 million this fiscal year.

    Remaining Share Repurchase Authorization
    $158M
    As of 2026-07-09
    Capital Expenditure
    $10.1M
    Q3 FY26

    Mainly reflecting the investment to support additional capacity in salty snacks business.

    Retail Takeaway Decline
    6.7%unchanged from Q2
    Q3 FY26

    Measured by Circana's MULO+C data and company estimates for unmeasured channels for 13 weeks ended May 31, 2026.

    Purposeful Nutrition Category Growth
    10%
    Q3 FY26

    Outperforming the company's retail takeaway.

    Industry KPIs

    9
    MetricValueDetails
    Gross margin32.5%%
    Brand platform growth1.4%%
    Cocoa commodity cost coverageconsistent reduction in cocoa prices
    Distribution network footprint—
    Inventory phasing cost effects—
    Volume mix vs pricing decompositionhigh single-digit price increase%
    Adjusted EPS operating income guidance$220M to $225MUSD
    Elasticity consumer response commentaryelasticities to be at 1 or higher
    Category growth benchmark channel shift data10%%

    Capital programs

    1
    Salty Snacks Capacity Expansionunderway
    Period spend: $10.1M

    Benefit: additional capacity

    Main investment reflected in Q3 capital expenditure, previously discussed.

    Risks & headwinds

    7
    Overall business performance well below potentialQ3 FY26

    Net sales declined 6.3%, Gross margin declined 390 bps, Adjusted EBITDA declined 22.5%

    Mitigation: Strengthening business economics, improving execution, rebuilding brand investment, focusing on three key turnaround priorities.

    Atkins net sales decline due to insufficient marketing and declining household penetrationQ3 FY26

    Net sales declined 24.6%, household penetration down 220 bps to 8.5%

    Mitigation: Resetting retail baseline, disciplined management, restoring clarity around consumer proposition, and exploring GLP-1 relevance.

    OWYN performance negatively impacted by product quality issue and ineffective marketing executionQ3 FY26 and next 6-12 months

    Retail takeaway declined 1.3%, expected distribution losses over next 6-12 months

    Mitigation: Addressed product issue, refocusing growth on core ready-to-drink and powder business, improving marketing.

    Significant cost inflation across proteins, packaging, and other key cost inputsCurrent fiscal year and continuing into next fiscal year

    High single-digit price increase effective September to offset inflation

    Mitigation: Implementing high single-digit price increase, productivity initiatives, cost reduction efforts.

    Volume impact due to price increases and consumer elasticitiesFY27

    Elasticities expected to be 1 or higher in FY27, leading to volume impact

    Mitigation: Short-term pain for long-term gain, rebuilding gross margins to fund marketing investment, improving brand metrics.

    Quest bar business underperformanceQ3 FY26

    Bar consumption declined by roughly 5%

    Mitigation: Improving top-of-the-funnel communication, innovation pipeline reflecting consumer preferences, appropriate marketing investment, new marketing agency hired.

    Non-cash loss on impairment of Goodwill and brand intangible assetsQ3 FY26

    $82M impairment

    Mitigation: Not a direct operational risk, but reflects underlying business challenges being addressed by turnaround efforts.

    Q&A highlights

    5

    Clarification on Q4 guidance implying weaker exit rate, gap between shipments and consumption, and how the high single-digit pricing action in September will impact FY27 top-line trajectory and elasticities.

    Chris explained Q4 guidance incorporates continued Q3 consumption trends but anticipates undershipping consumption to right-size inventories, especially due to OWYN distribution losses. Joe added that FY27 planning is ongoing, but consistent consumption trends from the past two quarters are a starting point. He emphasized the necessity of the high single-digit price increase to offset inflation, expecting elasticities of 1 or higher in FY27, leading to volume impact. This is seen as short-term pain for long-term gain, aiming to rebuild gross margins to fund marketing.

    “We would expect, as we look at fiscal '27, elasticities to be at 1 or higher. So there's going to be a volume impact to our business.”

    asked by Peter Grom · answered by Joseph Scalzo

    2 min read6 chapters

    Detailed Narrative

    01

    Turnaround Priorities and Progress

    The company is focused on three key priorities for its turnaround: strengthening business economics, ensuring consistency and discipline in strategic choices, and rebuilding brand investment. Early progress is noted in organizational focus and accountability, with Q3 financial performance exceeding expectations. The company is actively managing costs, implementing pricing actions to offset inflation, and gaining traction with productivity initiatives.

    02

    Brand Building and Consumer Insights

    Simply Good Foods is revamping its brand-building capabilities by focusing on stronger consumer insights and effective marketing with an ROI-driven approach. Investments are shifting towards top-of-the-funnel streaming and connected brand media. A recent assessment of GLP-1 therapies' impact on consumption behaviors has provided valuable insights for future marketing and innovation efforts.

    03

    Quest Brand Performance and Strategy

    Quest, the largest brand, saw retail takeaway growth of 1.4% and increased household penetration to 20.5%. Chips consumption grew over 17%, and milkshakes were up almost 50%. The primary challenge is to refocus on core bar and chip segments, improve buy rate in bars, and enhance top-of-the-funnel communication. A new marketing agency has been hired for Quest to reassert superior nutritionals and taste.

    04

    Atkins Brand Reset

    Atkins retail takeaway declined 23.9%, driven by declining household penetration and distribution losses. The brand has suffered from insufficient marketing support and inconsistent messaging. The current focus is on resetting the retail baseline, managing the brand with discipline, and restoring clarity around its consumer proposition, particularly in the context of GLP-1 weight management. Comparisons are expected to become more favorable in Q4 and FY27.

    05

    OWYN Brand Challenges and Refocus

    OWYN's retail takeaway declined 1.3%, impacted by a product quality issue and ineffective marketing execution, leading to expected distribution losses over the next 6-12 months. Despite these challenges, the company believes in OWYN's long-term potential, stemming from underlying consumer demand for clean label plant-based nutrition. The strategy is to complete the distribution reset and refocus growth on core ready-to-drink and powder businesses.

    06

    Long-Term Confidence and Strengths

    Management remains confident in the future, citing an attractive purposeful nutrition category, strong brands (Quest, Atkins, OWYN), robust capabilities in marketing, sales, R&D, and outsourced supply chain, and an asset-light operating model. A strong balance sheet provides financial flexibility for investment and capital allocation, reinforcing the belief in restoring profitable growth.

    AI-generated summary of the company’s earnings call. Not investment advice.