Simply Good Foods reports Q2 adjusted EPS 32c, consensus 29c

Reports Q2 revenue $296.6M, consensus $293.55M. "During the important "New Year, New You" season, Simply Good Foods retail takeaway in the second quarter of fiscal 2023, in the U.S. combined measured and unmeasured channels, was greater than expected and increased about 16%," said Joseph E. Scalzo, CEO. "Marketplace performance was driven by strong retailer programming, new product success and marketing investments that continue to drive household penetration of our brands. As expected, retail takeaway growth outpaced the net sales change principally due to the significant prior year retail customer inventory build. Total Company net sales were about the same as the year ago period and slightly greater than our estimate. The gross margin decline in the second quarter was greater than expectations due to slightly higher costs throughout the supply chain. We exceeded our Adjusted EBITDA estimate due to better than expected sales performance and slightly favorable operating expenses. As we look to the remainder of the year we are off to a good start as March retail takeaway in the combined U.S. measured and unmeasured channels increased about 12%. We continue to anticipate that U.S. retail takeaway will moderate over the remainder of the year due to a more challenging comparable in the year ago period and a recessionary economic environment. Therefore, we reaffirm our full year fiscal 2023 net sales growth of an increase slightly greater than our 4-6% long-term algorithm. However, full year fiscal 2023 gross margin will decline greater than our previous estimate due to the year-to-date gross margin performance and slightly higher costs within our supply chain over the remainder of the year. As a result, Adjusted EBITDA is expected to increase, but slightly less than the net sales growth rate. Importantly, the nutritional snacking category remains strong, and our brands are well positioned to succeed in today’s challenging macroeconomic environment. We will continue to execute on our strategic priorities focusing on doing the right thing for our customers and consumers that should enable us to deliver on our long-term growth objectives that ultimately drive increasing shareholder value."