The Simply Good Foods Company

Q3 fiscal 2026 net sales were $357 million, down 6.3% year over year. Gross profit was $116.1 million, down 16.2%, and gross margin was 32.5%, down 390 basis points; excluding $6.2 million of restructuring costs, gross margin was 34.3%, down 210 basis points. Adjusted EBITDA was $57.2 million, down 22.5%. On a GAAP basis, operating loss was $49.9 million and net loss was $52 million, compared with operating income of $59.3 million and net income of $41.1 million last year, reflecting an $82 million non-cash impairment. For FY2026, management now expects net sales of $1.345 billion-$1.355 billion, down 7%-6%; GAAP gross margin to decline roughly 375 bps; adjusted EBITDA of $220 million-$225 million, down 21%-19%; Q4 net sales of $322 million-$332 million; Q4 adjusted EBITDA of $52 million-$57 million; capital expenditures of $25 million-$30 million; and a Q4 effective tax rate of roughly 25%.

Joe Scalzo framed the quarter as better than expected but still far from acceptable, emphasizing that the turnaround is still in early stages. He said the key issues are largely controllable execution problems and outlined three priorities: rebuild margins, tighten strategic focus, and strengthen brand investment through better consumer insights and marketing execution. He was upbeat about Quest’s household penetration gains and the long-term relevance of the category and said Atkins and OWYN can be fixed with more disciplined execution.

Chris Bealer said Q3 gross profit was $116.1 million, down 16.2%, and gross margin was 32.5%, hurt by higher input costs and one-time restructuring costs; excluding those costs, margin was 34.3%, down 210 bps and above forecast. Selling and marketing expense rose to $39.2 million, while G&A fell to $40.5 million on a reported basis and to $34.2 million excluding restructuring and prior-year integration items. He noted cash of $123.9 million, term loan principal of $400 million, net debt-to-trailing-12-month adjusted EBITDA of about 1.2x, year-to-date operating cash flow of $102.2 million, capex of $10.1 million, and roughly $158 million remaining under the share repurchase authorization as of July 9, 2026.

Analysts focused on the softer implied exit rate, Quest’s bar slowdown, the timing and impact of the September price increase, and whether marketing spend could be stepped up sooner. Management said Q4 consumption trends should look similar to Q3, with expected under-shipment to normalize inventories and OWYN distribution losses also weighing on shipments. On Quest, Joe Scalzo said the brand remains relevant, but bar innovation and top-of-funnel communication need work; he also said 2027 will likely see some volume pressure from pricing and that marketing investment will be increased only as the P&L and ROI justify it.