Simply Good Foods Co (NASDAQ:SMPL) stock rose 2.30% (As on Apr 7, 12:21:43 AM UTC-4, Source: Google Finance) after the company posted better than expected result for the second quarter of FY 22. Gross margin declined 250 basis points to 36.6%, driven by the supply chain cost inflation, partially offset by pricing and favorable product form and retail channel mix. Adjusted EBITDA increased 27.1% to $54.2 million, due to higher sales and G&A leverage. Selling and marketing expense increased 22.2% to $32 million, driven by higher brand building initiatives on both brands. Interest expense declined $2.7 million to $5.3 million due to the reprice of a term loan in the second quarter and paydown of term loan debt. In the second quarter of fiscal 2022, the non-cash charge related to the remeasurement of the private warrant liabilities was 12.7 million. Net income in Q2 was $18.5 million versus a loss of $26.2 million in the year ago period.

Moreover, interest expense declined $4.7 million to $11.6 million due to the reprice of the term loan and the paydown at the term loan debt. In the second quarter, net cash provided by operating activities was $37.7 million, an increase of 53.53% versus the year ago period. As of February 26, 2022, the company had cash of $51.5 million. The outstanding principal balance of the company’s term loan debt was $431.5 million, and the trailing 12 month net debt to adjusted EBITDA ratio was 1.6 times. During the second quarter, the company repurchased $20.4 million of its common stock at an average cost of $35.68 per share. As of February 26, 2022, approximately $27.5 million were made available under the existing stock repurchase authorization.

SMPL in the second quarter of FY 22 has reported the adjusted earnings per share of 36 cents, beating the analysts’ estimates for the adjusted earnings per share of 28 cents, according to Zacks Investment Research. The company had reported the adjusted revenue growth of 25.2 percent to $296.7 million in the second quarter of FY 22, beating the analysts’ estimates for revenue of $275.9 million. Total Simply Good Food second quarter net sales increased 28.7% to $297 million. North American net sales increased 31.5% and was primarily driven by volume. The international business declined 25.1% due to the European business exit. Core international net sales growth was 6.1%, and the European business exit was a 1.5 percentage point headwind to total company net sales growth.