Benzinga | Jan 5, 2022 08:28AM EST

Simply Good Foods Q1 Earnings Top Street View; Warns On Gross Margin Pressure

* Simply Good Foods Co (NASDAQ:SMPL) reported first-quarter FY22 sales of $281.26 million, up 21.7% year-on-year, beating the consensus of $265.44 million.

* The increase in revenue was driven by improving consumer mobility and shopper traffic versus the year-ago period.

* Gross profit was $116.6 million, with a gross margin expanding 70 basis points Y/Y to 41.4%.

* Operating expenses were $58.5 million, up 6.7% Y/Y, with an operating margin was 20.6%. Adjusted EBITDA increased 34.7% Y/Y to $65.6 million.

* Net income fell 50.7% Y/Y to $21.2 million. Adjusted EPS of $0.43 beats the consensus of $0.35.

* The company ended Q1 with cash and equivalents totaling $35.4 million.

* Outlook: Simply Good Foods expects FY22 net sales to increase 12-14%, versus the previous view of 8-10% growth.

* The company continues to expect Adjusted EPS to increase greater than the Adjusted EBITDA growth rate, which is currently expected to increase slightly less than the net sales growth rate.

* The company expects the gross margin contraction of about 250 basis points versus the prior view for modest gross margin contraction.

* Price Action: SMPL shares closed higher by 0.64% at $42.35 on Tuesday.