Nasdaq:SMPL
Simply Good Foods Co
Simply Good Foods Co. leverages its proprietary brands and private label expertise to deliver high-margin organic and sustainable food solutions across North America.
Key Metrics
Investment Thesis
Bull Case
Investors should consider SMPL for its proven ability to grow revenue even when margins face headwinds, a critical trait in the volatile food industry. The company's dual strategy of high-margin branded products and volume-driven private labels offers a balanced risk profile that protects against single-line failures. Furthermore, the massive $1.26B in operating intangible assets indicates strong brand equity that can be leveraged for future acquisitions or premium pricing power.
Bear Case
The sharp drop in net income to $103.6M in 2025 raises concerns about margin compression or one-time charges that could signal deeper operational issues. With total liabilities reaching $589.2M and significant debt repayments of $150.0M, the company faces a heavy capital structure burden that could limit flexibility during downturns. Additionally, the negative change in accounts payable ($18.5M) suggests potential liquidity strain or aggressive inventory management that could disrupt supply chain relationships.
About Simply Good Foods Co
Simply Good Foods Co. (SMPL) is a leading provider of healthy, sustainable food solutions serving North American grocery and foodservice channels. The company specializes in plant-based products like Simply Organic, Simple Truth, and Whole Earth Farms, leveraging its vertical integration to offer value-added private-label goods. With a strong balance sheet and consistent revenue growth, SMPL aims to capitalize on the shifting consumer preference toward clean-label and organic foods.
Analysis
Management Discussion
Despite a recent decline in net income from $139.3M in 2024 to $103.6M in 2025, the company maintained robust revenue growth, rising from $1.33B to $1.45B over the same period. This decoupling suggests management is prioritizing volume expansion and market share gains, likely absorbing higher operating expenses or cost of revenue to fuel top-line momentum. The strong operating cash flow of $178.5M provides ample liquidity to fund capital expenditures of $20.5M and manage the significant debt repayment activity observed in the latest period.
Industry Overview
The North American organic and natural foods market is experiencing double-digit growth driven by health consciousness and environmental awareness among consumers. However, intense competition from large CPG giants and private label alternatives is squeezing margins for mid-sized players like SMPL. Success in this sector now requires not just product quality but deep supply chain integration to manage rising input costs.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | $1.24B | $1.33B | $1.45B |
| Cost of Revenue | $789.3M | $819.8M | $925.2M |
| Gross Profit | $453.4M | $511.6M | $525.7M |
| Operating Expenses | $248.5M | $305.1M | $368.9M |
| Operating Income | $204.9M | $206.5M | $156.9M |
| R&D | $4.3M | $5.4M | $5.5M |
| G&A | $111.6M | $129.7M | $155.9M |
| Marketing | $119.5M | $143.9M | $134.3M |
| Stock-Based Comp | $14.5M | $18.4M | $15.3M |
| D&A | $20.3M | $21.0M | $21.4M |
| Depreciation | $4.4M | $5.8M | $6.1M |
| Amortization | $15.7M | $15.2M | $15.1M |
| Other OpEx | $13.1M | $26.0M | $73.1M |
| Non-Operating Income | $-29.3M | $-20.4M | $-21.0M |
| Interest Expense | $30.1M | — | — |
| Interest Income | $1.1M | $4.3M | $2.7M |
| Pre-Tax Income | $175.7M | $186.1M | $135.9M |
| Income Tax | $42.1M | $46.7M | $32.3M |
| Continuing Ops | $133.6M | $139.3M | $103.6M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $133.6M | $139.3M | $103.6M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $133.6M | $139.3M | $103.6M |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Current Assets | $371.7M | $440.3M | $453.7M |
| Cash & Equivalents | $87.7M | $132.5M | $98.5M |
| Accounts Receivable | $145.1M | $150.7M | $165.0M |
| Inventory | $116.6M | $142.1M | $167.2M |
| Other Current Assets | $22.3M | $14.9M | $23.0M |
| Long-Term Assets | $1.73B | $2.00B | $1.94B |
| PP&E (Net) | $24.9M | $24.8M | $39.7M |
| Intangibles | $1.11B | $1.34B | $1.26B |
| Goodwill | $543.1M | $591.7M | $590.0M |
| Other LT Assets | $49.3M | $42.9M | $51.0M |
| Total Assets | $2.10B | $2.44B | $2.40B |
| Current Liabilities | $89.9M | $108.6M | $124.6M |
| Accounts Payable | $52.7M | $58.6M | $78.3M |
| Current Debt | $143.0K | $0 | — |
| Current Leases | $7.6M | $5.5M | $5.9M |
| Taxes Payable | $65.0K | $2.7M | $1.2M |
| Other Current Liab | $-5.7M | $-7.9M | $-7.0M |
| Long-Term Liabilities | $436.1M | $600.0M | $464.7M |
| Long-Term Debt | $281.6M | $397.5M | $249.1M |
| Other LT Liab | $154.5M | $202.6M | $215.6M |
| Total Liabilities | $526.0M | $708.7M | $589.2M |
| Shareholders' Equity | $1.57B | $1.73B | $1.81B |
| Paid-In Capital | $1.30B | $1.32B | $1.35B |
| Retained Earnings | $348.0M | $487.3M | $590.9M |
| AOCI | $-2.6M | $-2.0M | $-2.4M |
| Treasury Stock | $78.5M | $78.5M | $129.3M |
| Total L&E | $2.10B | $2.44B | $2.40B |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Net Income (CFO) | $133.6M | $139.3M | $103.6M |
| Non-Cash Adjustments | $56.7M | $115.3M | $9.9M |
| Working Capital Changes | $-19.2M | $-38.9M | $64.9M |
| Cash from Operations | $171.1M | $215.7M | $178.5M |
| Capital Expenditures | $11.6M | $5.7M | $20.5M |
| Cash from Investing | $-12.2M | $-286.9M | $-20.9M |
| Debt Issuances | — | $250.0M | $0 |
| Debt Repayments | $121.5M | $135.0M | $150.0M |
| Share Buybacks | $16.4M | $0 | $50.9M |
| Cash from Financing | $-138.5M | $115.9M | $-191.2M |
| FX Effect | $-176.0K | $92.0K | $-382.0K |
| Net Change in Cash | $20.4M | $44.7M | $-33.7M |
| Beginning Cash | $67.5M | $87.7M | $132.5M |
| Ending Cash | $87.7M | $132.5M | $98.5M |
Frequently Asked Questions
How does Simply Good Foods Co make money?
Revenue is primarily driven by three core brand portfolios: Organic Valley (farm-to-table dairy and plant-based), Simple Truth (mass-market private label organic goods), and Whole Earth Farms (value-oriented organic staples). The company also generates significant income through its Bountiful Harvest subsidiary, which supplies fresh produce to major national retailers, providing a stable cash flow foundation alongside higher-margin branded products.
What are the main risks for SMPL?
1. Input Cost Volatility: Heavy reliance on agricultural commodities exposes margins to unpredictable fluctuations in crop yields, livestock prices, and energy costs. 2. Retailer Power Dynamics: Dependence on major national chains for private label distribution creates vulnerability to channel consolidation or unfavorable contract terms. 3. Consumer Sentiment Shifts: A potential recession could reduce discretionary spending on premium organic brands, impacting overall revenue growth rates.
What is SMPL's competitive advantage?
1. Proprietary Private Label Network: Ownership of Simple Truth and Whole Earth Farms provides direct access to retailer supply chains with superior margin profiles compared to third-party private labelers. 2. Vertical Integration Control: Strategic partnerships with Organic Valley allow for deep supply chain visibility and cost efficiencies in sourcing dairy, grains, and produce. 3. Brand Trust & Sustainability: Decades of focus on organic certification and sustainable farming create strong brand loyalty among health-conscious consumers willing to pay a premium.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.