Simply Good Foods (NASDAQ:SMPL) executives said the company’s fiscal first quarter results were modestly ahead of internal expectations as growth from Quest and OWYN offset ongoing declines at Atkins, while inflation, tariffs, and elevated ingredient costs pressured margins. Management reaffirmed its full-year fiscal 2026 outlook for net sales and adjusted EBITDA and reiterated expectations for a stronger second half as pricing and productivity gains increasingly flow through results.
Quarter results: flat sales, lower profitability
For the quarter ended November 29, 2025, reported net sales were $340.2 million, essentially flat versus the prior year. CFO Chris Beeler said Quest remained the key growth driver, with net sales up nearly 10% on 12% consumption growth. Atkins and OWYN net sales declined 17% and 3%, respectively.
Adjusted EBITDA was $55.6 million, down 20.6%. Net income was $25.3 million versus $38 million a year ago, and diluted EPS was $0.26 versus $0.38. Adjusted diluted EPS was $0.39 compared with $0.49 in the prior-year quarter.
Brand performance: Quest and OWYN up in consumption, Atkins down on distribution losses
CEO Jeff Tanner said total company consumption rose 2% in the quarter, led by double-digit gains from Quest and OWYN, which together represented 71% of net sales. He noted the broader nutritional snacking category grew 10% during the period.
Quest delivered 12% consumption growth and nearly 10% net sales growth. Tanner highlighted improving brand metrics, including household penetration approaching 20%, up 200 basis points year-over-year. Quest’s salty snacks business was a standout, with consumption up 40%. The company cited distribution gains, velocity growth, and easier year-ago comparisons after prior supply constraints. Quest Salty household penetration surpassed 10%, and management pointed to higher distribution measures, including nearly five points of ACV gains and a 34% increase in average items per store.
Quest bars were flat in consumption versus the prior year. Tanner said re-accelerating the bar business is “unacceptable” as performance stands today and described a multi-pronged plan that includes platform innovation, additional merchandising and distribution, and increased marketing, with expected benefits beginning in the second half.
Atkins consumption declined 19%, consistent with the company’s outlook. Tanner said lost distribution at several key retailers accounted for roughly two-thirds of the decline. Management described efforts to work with retailers to “right-size” the assortment and repurpose shelf space from lower-velocity Atkins SKUs toward Quest and OWYN. Tanner also noted brand modernization steps rolling out, including new packaging across most SKUs, an updated website, refreshed marketing, and a new four-pack meal bar format intended to offer a sharper opening price point. He said this initiative has lifted unit velocities on average by high single digits and increased the share of new buyers added to the brand by 300 basis points, though the company will continue evaluating the revenue trade-offs.
OWYN consumption rose 18%, aided by distribution growth in ready-to-drink products and powders and an ongoing test in some club stores. Household penetration increased 100 basis points to 4.5%. However, OWYN’s net sales did not keep pace with consumption in the quarter. Beeler said the gap reflected lingering product quality issues and elevated retailer inventory levels entering the quarter, while later noting inventory is now more aligned for shipments to track consumption. Tanner said ratings have improved since summer following a new formula that has been shipping since August, but acknowledged more work is needed to rebuild quality perception.
Margins and costs: pricing, productivity, cocoa coverage, tariffs, and whey inflation
Management emphasized actions to rebuild gross margin. Tanner said recent pricing actions are now reflected on shelf, with elasticities tracking expectations, though he cautioned data remains limited. Beeler added that pricing provided “almost zero benefit” in Q1 because pricing reached shelf toward the end of October, with a low single-digit benefit expected for the balance of the year.
The company also highlighted its productivity program, which began 18 months ago. Tanner said it is taking costs out of the system and building a multi-year pipeline, with benefits expected to be more visible in the second half once past peak inflation levels.
On commodities, Tanner and Beeler pointed to improved cocoa positioning. Tanner said the company extended supply coverage at year-over-year favorable prices, most notably cocoa, with benefits expected to begin flowing into the P&L late in Q4 and into fiscal 2027. Beeler also called out whey inflation as a newer headwind that partially offsets cocoa and tariff relief.
Regarding tariffs, Beeler said the company now expects some relief tied to revised trade agreements and exemptions, with benefits starting to flow in the second half due to inventory timing lags.
Outlook: reaffirmed full-year guidance, weaker Q2 expected, stronger second half anticipated
Simply Good Foods reaffirmed its fiscal 2026 guidance:
- Net sales growth: -2% to +2%
- Gross margin: down 100 to 150 basis points
- Adjusted EBITDA: -4% to +1%
Beeler said Q2 is expected to be the weakest quarter for consumption and net sales growth, with net sales projected to decline 3.5% to 4.5% year-over-year. Management attributed the near-term softness to initial price elasticities, lingering OWYN product-quality impacts, and tough comparisons for Quest and OWYN tied to stronger prior-year merchandising. The company expects Q2 gross margin to be down about 300 basis points year-over-year, improving sequentially from Q1, and said Q2 adjusted EBITDA is now expected to decline double digits, slightly below prior expectations due to higher whey costs.
In the second half, management expects net sales growth to move toward the higher end of the full-year range, supported by distribution wins, normalizing elasticities, lapping OWYN’s product issues, and increased innovation. On gross margin, the company expects Q3 to be flattish year-over-year and Q4 to expand by nearly 200 basis points, with Q4 positioned as the strongest period of profit growth (up double digits year-over-year).
Capital allocation: accelerated buybacks and expanded authorization
The company also used the quarter to accelerate share repurchases. Tanner said Simply Good Foods borrowed an incremental $150 million during the quarter to speed up buybacks, arguing the stock price “discounts” the company’s long-term growth opportunity. Beeler said the company repurchased 5 million shares for $100 million in Q1 and, through January 6, had spent nearly $150 million to repurchase more than 7% of shares outstanding at the start of the fiscal year.
The board approved an additional $200 million increase to the existing repurchase program, building on a $150 million incremental authorization announced last quarter. Beeler said approximately $224 million remains under the current program.
On the balance sheet, the company ended Q1 with $194.1 million of cash and $400 million outstanding on its term loan, with net debt to trailing 12-month adjusted EBITDA of about 0.8x. Cash flow from operations rose to $50.1 million, aided by working capital improvements. Capital expenditures were $2.1 million in Q1, while full-year capex is still expected to be $30 million to $40 million, largely tied to a co-investment to support added capacity in the fast-growing salty snacks business.
About Simply Good Foods (NASDAQ:SMPL)
Simply Good Foods Co (NASDAQ: SMPL) is a North American consumer packaged foods company specializing in better-for-you nutrition products. The company’s portfolio centers on two well-established brands, Atkins and Quest, which offer a range of low-carbohydrate, high-protein bars, powders, shakes, and snacks. Simply Good Foods aims to support consumers’ health and wellness goals by delivering convenient, nutrient-dense options without added sugars or artificial sweeteners.
Under the Atkins brand, the company produces meal replacements, snack bars, and ready-to-drink shakes designed for low-carb dieters.
