Overview of The Simply Good Foods Company (SMPL) 4th quarter 2021 earnings report
Category: Simply Good Foods (SMPL)
Date: 25 October 2021 Stock Price of Simply Good Foods Company (SMPL): $37.27 Market Capital of Simply Good Foods Company: $3.6 billion We take a look at the 4th quarter earnings report of their 2021 fiscal year of The Simply Good Foods Company, a company whose portfolio is largely made up by nutrition bars and ready to drink shakes
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About The Simply Good Foods Company
The Simply Good Foods Company (Nasdaq: SMPL), headquartered in Denver, Colorado, is a highly-focused food company with a product portfolio consisting primarily of nutrition bars, ready-to-drink shakes, sweet and salty snacks and confectionery products marketed under the Atkins®, Quest®, SimplyProtein® and Atkins Endulge® brand names. Simply Good Foods is poised to expand its wellness platform through innovation and organic growth along with investment opportunities in the snacking space and broader food category. Simply Good Foods aims to lead the nutritious snacking movement with trusted brands that offer a variety of convenient, innovative, great-tasting, better-for-you snacks and meal replacements
Overview of Simply Good Foods' 4th quarter 2021 earnings report
Fourth Quarter Highlights:
- Net sales increased 16.9% driven by solid Atkins and Quest performance
- Gross profit margin of 40.2%, an increase of 60 basis points
- Net income of $18.2 million versus a net loss of $39.3 million
- Earnings per diluted share of $0.19 versus a loss per diluted share of $(0.41)
- Adjusted Diluted EPS of $0.29 versus $0.20
- Adjusted EBITDA increased 30.9% to $48.5 million
- Full year fiscal 2022 outlook:
- Net sales expected to increase 8-10% versus fiscal year 2021, including a 1 percentage point headwind related to the European business exit
- Adjusted EBITDA anticipated to increase slightly greater than the net sales growth rate
- Adjusted Diluted EPS(3,6) expected to increase greater than the Adjusted EBITDA growth rate
Simply Good Foods' management commentary on the results and earnings guidance
DENVER, Oct. 22, 2021 (GLOBE NEWSWIRE) -- The Simply Good Foods Company (Nasdaq: SMPL) (“Simply Good Foods,” or the “Company”), a developer, marketer and seller of branded nutritional foods and snacking products, today reported financial results for the thirteen and fifty-two weeks ended August 28, 2021. The Company’s fiscal fourth quarter 2021 and full year results include Quest results for the full period. The Company’s fiscal fourth quarter 2020 results include thirteen weeks of Quest and about forty-two weeks for the prior year.
“I’m pleased with our fourth quarter and fiscal 2021 performance as our team executed well against our plan under improving, yet challenging circumstances,” said Joseph E. Scalzo, President and Chief Executive Officer of Simply Good Foods. “We delivered solid sales and earnings growth, increased gross margin in an inflationary environment and instituted a price increase, effective in September, to address supply chain cost inflation in fiscal 2022.”
“Fourth quarter fiscal 2021 net sales growth was driven by increasing household penetration, improving shopper trips and greater consumer mobility versus the year ago period. Total Simply Good Foods retail takeaway for the thirteen weeks ended August 28, 2021, increased 18.7% in the U.S. measured channels of IRI MULO + Convenience Stores and, as expected, resulted in retail dollar sales similar to last quarter. The Company estimates that its U.S. retail takeaway growth rate in unmeasured channels was about the same as measured channels driven by solid Quest e-commerce performance. Atkins and Quest fiscal fourth quarter 2021 retail takeaway in measured channels increased 8.7% and 34.9%, respectively, and each brand gained market share in their respective subsegments of weight management and active nutrition.”
“As we look to fiscal 2022, we are well positioned to build on our momentum and deliver solid net sales and earnings growth. In Atkins and Quest we have two strong brands with advertising, marketing and innovation plans in place to drive growth. Specifically, we expect full year fiscal 2022 net sales to increase 8-10% versus last year and Adjusted EBITDA(4,6) to increase slightly greater than the net sales growth rate. This outlook assumes no meaningful change in workplace mobility. We anticipate that net sales growth in the first half of fiscal year 2022 will be stronger than the second half of fiscal 2022 as year-over-year comparisons are sequentially more difficult as we proceed through the year.”
Balance Sheet and Cash Flow
Full-year fiscal 2021 combined cash flow from operations was $132.1 million enabling the Company to significantly reduce its leverage. Specifically, in fiscal 2021, the Company repaid $150.0 million of its term loan debt, and at the end of the year the outstanding principal balance was $456.5 million. As of August 28, 2021, the Company had cash of $75.3 million and a trailing twelve-month Net Debt to Adjusted EBITDA ratio of 1.8x(5).
Outlook
Assuming no meaningful improvement in workplace mobility and no significant supply chain cost inflation from current levels, the Company anticipates the following in fiscal 2022:
“Fourth quarter fiscal 2021 net sales growth was driven by increasing household penetration, improving shopper trips and greater consumer mobility versus the year ago period. Total Simply Good Foods retail takeaway for the thirteen weeks ended August 28, 2021, increased 18.7% in the U.S. measured channels of IRI MULO + Convenience Stores and, as expected, resulted in retail dollar sales similar to last quarter. The Company estimates that its U.S. retail takeaway growth rate in unmeasured channels was about the same as measured channels driven by solid Quest e-commerce performance. Atkins and Quest fiscal fourth quarter 2021 retail takeaway in measured channels increased 8.7% and 34.9%, respectively, and each brand gained market share in their respective subsegments of weight management and active nutrition.”
“As we look to fiscal 2022, we are well positioned to build on our momentum and deliver solid net sales and earnings growth. In Atkins and Quest we have two strong brands with advertising, marketing and innovation plans in place to drive growth. Specifically, we expect full year fiscal 2022 net sales to increase 8-10% versus last year and Adjusted EBITDA(4,6) to increase slightly greater than the net sales growth rate. This outlook assumes no meaningful change in workplace mobility. We anticipate that net sales growth in the first half of fiscal year 2022 will be stronger than the second half of fiscal 2022 as year-over-year comparisons are sequentially more difficult as we proceed through the year.”
Balance Sheet and Cash Flow
Full-year fiscal 2021 combined cash flow from operations was $132.1 million enabling the Company to significantly reduce its leverage. Specifically, in fiscal 2021, the Company repaid $150.0 million of its term loan debt, and at the end of the year the outstanding principal balance was $456.5 million. As of August 28, 2021, the Company had cash of $75.3 million and a trailing twelve-month Net Debt to Adjusted EBITDA ratio of 1.8x(5).
Outlook
Assuming no meaningful improvement in workplace mobility and no significant supply chain cost inflation from current levels, the Company anticipates the following in fiscal 2022:
- Net sales to increase 8-10% versus last year. Included in the sales outlook is about a 1 percentage point headwind related to the European business exit that was completed in the fourth quarter of fiscal 2021;
- Modest gross margin contraction as supply chain cost inflation should largely be offset by the price increase that went into effect in September and cost savings initiatives;
- Full-year fiscal 2022 Adjusted EBITDA(4,6) to increase slightly greater than the net sales growth rate; and,
- Adjusted Diluted EPS(3,6) to increase greater than the Adjusted EBITDA growth rate.
Simply Good Foods (SMPL) stock price chart over the last 5 years
The image below shows the stock price history of Simply Good Foods since its listing in middle of 2017. And it's been a very good time for Simply Good Foods stockholders. Over the last 5 years the stock returned 210.6% to Simply Good Food stockholders.
The stock of Simply Good Foods is also trading at a lot closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Simply Good Foods stock is very positive at this point in time.
The stock of Simply Good Foods is also trading at a lot closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Simply Good Foods stock is very positive at this point in time.
Simply Good Foods Company (SMPL) latest stock valuation
So what is Simply Good Foods stock worth based on the release of their latest earnings report and their outlook provided. Based on their latest earnings report and the outlook provided our valuation model provides a target price (full value price) for Simply Good Foods at $19.70 a stock. We therefore believe that the stock is overvalued.
We usually suggest long term investors look to enter a stock at least 10% below our target price (full value price) which in this case is $19.70. So a good entry point into Simply Good Foods' stock would be at $17.70 or below.
We expect the stock of Simply Good Foods to pull back from current levels to levels closer to our target price (full value price) in coming weeks and months.
We usually suggest long term investors look to enter a stock at least 10% below our target price (full value price) which in this case is $19.70. So a good entry point into Simply Good Foods' stock would be at $17.70 or below.
We expect the stock of Simply Good Foods to pull back from current levels to levels closer to our target price (full value price) in coming weeks and months.
Next earnings release for Simply Good Foods Company
It is expected that Simply Good Foods Company will release their 1st quarter 2022 earnings report in late January 2022