Simply Good Foods Co (NASDAQ:SMPL) stock fell 7.46% (As on April 10, 11:24:21 AM UTC-4, Source: Google Finance) after the company reported second quarter results that missed revenue expectations while earnings exceeded analyst estimates. Gross profit of $103.0 million decreased 20.8% versus the comparable year ago period, driven by inflationary costs, most notably cocoa, and tariffs. Gross margin declined 460 basis points to 31.6%, pressured by inflationary costs, particularly cocoa, and tariffs. The company recorded a $249.0 million non-cash impairment charge related to the Atkins and OWYN brand intangible assets, resulting in a net loss of $159.7 million, or -$1.73 per share, compared to net income of $36.7 million in the prior year period. Adjusted EBITDA fell 18.4% to $55.5 million from $68.0 million. At the end of the second quarter of fiscal year 2026, the Company had cash of $107.4 million and an outstanding principal balance on its term loan of $400.0 million, bringing the Company’s quarter-end trailing twelve-month Net Debt to Adjusted EBITDA ratio to 1.2x.

SMPL in the second quarter of FY 26 has reported the adjusted earnings per share of $0.45, beating the analysts’ estimates for the adjusted earnings per share of $0.41. The company had reported the adjusted revenue decline of 9.4 percent to $326 million in the second quarter of FY 26, missing the analysts’ estimates for revenue of $346.6 million. The company’s performance was driven by significant declines in Atkins, which fell 26.6%, and OWYN, down 16.8%, while Quest grew just 0.3%. The Company’s net sales performance was largely driven by poor retail takeaway relative to what the company experienced in the first quarter. Quarter over quarter Quest consumption was affected by slower base velocity in chips and bars. OWYN consumption declined year over year due to lapping the heavy promotional period in the prior year and poor base velocities, including on newly expanded distribution.

For the third quarter, Simply Good Foods expects revenue of $329 million to $338 million, with a midpoint of $333.5 million falling well below the analyst consensus of $379.8 million. The company also lowered its full-year fiscal 2026 revenue guidance to a range of $1.31 billion to $1.35 billion, with the midpoint of $1.33 billion significantly below the $1.44 billion consensus estimate. For fiscal 2026, the company expects adjusted EBITDA of $217 million to $225 million, representing a decline of 19% to 22% year-over-year. FY 26 Gross margins are expected to decline between 300 and 350 basis points year-over-year.