Simply Good Foods Q1 Earnings Top Street View; Warns On Gross Margin Pressure

Simply Good Foods Co SMPL reported first-quarter FY22 sales of $281.26 million, up 21.7% year-on-year, beating the consensus of $265.44 million.
The increase in revenue was driven by improving consumer mobility and shopper traffic versus the year-ago period.
Gross profit was $116.6 million, with a gross margin expanding 70 basis points Y/Y to 41.4%.
Operating expenses were $58.5 million, up 6.7% Y/Y, with an operating margin was 20.6%. Adjusted EBITDA increased 34.7% Y/Y to $65.6 million.
Net income fell 50.7% Y/Y to $21.2 million. Adjusted EPS of $0.43 beats the consensus of $0.35.
The company ended Q1 with cash and equivalents totaling $35.4 million.
Outlook: Simply Good Foods expects FY22 net sales to increase 12-14%, versus the previous view of 8-10% growth.
The company continues to expect Adjusted EPS to increase greater than the Adjusted EBITDA growth rate, which is currently expected to increase slightly less than the net sales growth rate.
The company expects the gross margin contraction of about 250 basis points versus the prior view for modest gross margin contraction.
Price Action: SMPL shares closed higher by 0.64% at $42.35 on Tuesday.