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In closing out its fiscal 2019 year, ( The Simply Good Foods Company NASDAQ:SMPL) recorded another quarter of double-digit top-line growth and looked ahead to the pending close of an acquisition that will considerably boost its sales and adjusted EBITDA going forward. Results released Tuesday reveal that the small-cap dynamo, which sells the Atkins line of wellness packaged foods as well as its "Simply"-branded snacks and confections, also ramped up its marketing efforts -- which contributed to a weaker bottom line. As we discuss the quarter's details below, note that all comparative numbers are presented against those of the prior year's quarter.
Revenue
$139.2 million
$108.3 million
28.5%
Net income
$6.1 million
$11.7 million
(47.9%)
Diluted earnings per share
$0.07
$0.15
(53.3%)
Even as Simply Good Foods expands its Canadian "Simply Protein" snack bar line into the U.S., and prepares for the Quest merger, management observed during Tuesday's earnings conference call that Atkins-branded bars, shakes, treats, meal kits, and frozen meals still form the core of the business and, moreover, enjoyed a stellar year. CEO Joe Scalzo provided the following detail:
The category has benefited from powerful consumer mega trends, such as meal replacement convenience, on-the-go consumption and health and wellness. Atkins has benefited from the category trends as well as our strategy over the last few years of appealing to lifestyle consumers.
And while our consumer proposition is sound and our marketing efforts are on target, the magnitude of growth rate of our initiatives frankly surprised us and exceeded our best case scenarios. For perspective, fiscal 2019 was the strongest year of total retail growth for Atkins in over a decade, with over $100 million in retail growth.
Looking ahead to the new fiscal year, Simply Good Foods provided a broad outline of earnings expectations on Tuesday. The company anticipates top-line growth near the high end of its long-term 4%-6% expansion target. This expectation includes the headwind of a 52-week fiscal 2020 versus 2019's 53 weeks. However, the outlook is exclusive of any contribution from the organization's pending acquisition of Quest Nutrition.
As for earnings, Simply Good Foods doesn't issue formal earnings-per-share guidance. But management did relay its expectation that adjusted EBITDA will grow faster than the rate of sales next year. Thus, Simply Good Foods should be able to net adjusted EBITDA of at least $105 million in fiscal 2020.