11:52 AM EDT, 06/27/2024 (MT Newswires) -- Simply Good Foods' ( SMPL ) fiscal third-quarter revenue rose less than expected while earnings outperformed analysts' estimates as the company lifted its full-year outlook for core profitability.

Revenue rose to $334.8 million for the three months ended May 25 from $324.8 million a year ago but missed the $337.9 million average analyst estimate on Capital IQ. The owner of brands like Quest and Atkins said North America's sales rose 3.2% while international revenue fell 2.4%.

"Simply Good Foods ( SMPL ) third quarter results were led by continued Quest growth, improving Atkins marketplace trends as well as strong gross margin performance," Chief Executive Geoff Tanner said in a statement. Nutritional snacks brand Quest's retail takeaway was driven by strong salty snacks growth, while Atkins' overhaul plan remains on track, Tanner said.

Adjusted earnings per share climbed to $0.50 from $0.44 year over year and topped the $0.48 consensus. "Gross margin improvement in the quarter, a 320 basis points increase versus last year, enabled investments in our business and solid earnings growth," Tanner said.

Simply Good Foods ( SMPL ) upped its full-year adjusted earnings before interest, taxes, depreciation and amortization guidance to about 8% from a prior range of 6% to 8% growth. "The year-to-date strong gross margin expansion has provided the company with flexibility to meaningfully invest in marketing and growth initiatives to drive earnings growth," according to Simply Good Foods ( SMPL ).

Earlier this month, the company completed its acquisition of Only What You Need, which is expected to see sales of between $25 million and $30 million this fiscal year.

Excluding the acquisition, Simply Good Foods ( SMPL ) affirmed its fiscal 2024 guidance for sales to increase roughly at the midpoint of its long-term algorithm of 4% to 6%. Two analysts surveyed by Capital IQ are modeling for revenue to increase to $1.32 billion in the ongoing year from the $1.24 billion Simply Good Foods ( SMPL ) reported for fiscal 2023.

Only What You Need "represents a strategic win for the company" as it marks a third complementary brand with a new consumer segment and significantly strengthens its position in the rapidly expanding ready-to-drink shake market, according to Tanner. "We also believe our scaled go-to-market capabilities will drive profitable growth through enhanced distribution, greater household penetration and a cost-efficient supply chain," he said.

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