SMPL - Simply Good Foods flies higher on earnings beat raised forecast

Simply Good Foods ( NASDAQ: SMPL ) posted stronger than expected fourth quarter earnings on Friday, powered largely by pricing power.

For the quarter, the Denver-based nutrition company posted beats on top and bottom lines, with net price realization providing a 9.5% contribution to net sales growth to overcome volume declines and a headwind from frozen pizza licensing. Management also indicated that the close of September reflected “more typical retail inventory levels” for the company.

“Fiscal 2022 was another successful year for our Company as we exceeded our top and bottom line growth expectations, despite the significant external challenges we faced throughout the year,” CEO Joseph E. Scalzo said.

Moving forward, Scalzo expects the snacking category to continue to grow with solid net sales showing up early in the quarter. Given the strong momentum seen from the close of fiscal year 2022 into 2023, he raised the company’s net sales forecast to reflect an “increase slightly greater than our 4-6% long-term algorithm,” accounting for the aforementioned frozen pizza headwind.

“While early, first quarter fiscal 2023 retail takeaway performance is off to a good start,” he commented. “Despite a slowing economy, we remain cautiously optimistic.”

To be sure, Scalzo also said that the company expects inflation and supply chain impacts to persist into 2023. As such, gross margins are expected to decline. He said that the company will pursue cost-cutting initiatives in an attempt to offset these headwinds.

Shares of Simply Good Foods ( SMPL ) rose 3.4% shortly after the print .

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