Simply Good Foods Co 10-Q for FY2021 Q1

Simply Good Foods Co (SMPL)

10-Q 2021-01-07 For: 2020-11-28

Added on April 12, 2026

About this 10-Q

Simply Good Foods Co filed this 10-Q on January 7, 2021, covering the quarter ended November 28, 2020 (FY2021 Q1).

Headline figures

Quarter ended November 28, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $231.15M; up 51.9% from $152.15M a year earlier
Net income: $22.5M; compared with a net loss of $4.79M a year earlier
Diluted EPS: $0.23; compared with -$0.05 a year earlier

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Delaware						82-1038121
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


		Page
PART I. Financial Information
Item 1.	Financial Statements (Unaudited):	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations and Comprehensive Income (Los s)	5
	Condensed Consolidated Statements of Cash Flows	6
	Condensed Consolidated Statements of Stockholders’ Equity	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4.	Controls and Procedures	32
PART II. Other Information
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
	Signatures	35


	November 28, 2020		August 29, 2020
Assets
Current assets:
Cash and cash equivalents	$	91,476	$	95,847
Accounts receivable, net	97,887		89,740
Inventories	76,067		59,085
Prepaid expenses	4,345		3,644
Other current assets	9,178		11,947
Total current assets	278,953		260,263

Long-term assets:
Property and equipment, net	11,344		11,850
Intangible assets, net	1,149,895		1,158,768
Goodwill	543,134		544,774
Other long-term assets	31,892		32,790
Total assets	$	2,015,218	$	2,008,445

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	41,409	$	32,240
Accrued interest	720		960
Accrued expenses and other current liabilities	32,972		38,007
Current maturities of long-term debt	275		271
Total current liabilities	75,376		71,478

Long-term liabilities:
Long-term debt, less current maturities	572,923		596,879
Deferred income taxes	88,543		84,352
Other long-term liabilities	21,884		22,765
Total liabilities	758,726		775,474
See commitments and contingencies (Note 10)

Stockholders’ equity:
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued	—		—
Common stock, $0.01 par value, 600,000,000 shares authorized, 95,818,871 and 95,751,845 shares issued at November 28, 2020 and August 29, 2020, respectively	958		958
Treasury stock, 98,234 and 98,234 shares at cost at November 28, 2020 and August 29, 2020, respectively	(2,145)		(2,145)
Additional paid-in-capital	1,095,573		1,094,507
Retained earnings	163,030		140,530
Accumulated other comprehensive loss	(924)		(879)
Total stockholders’ equity	1,256,492		1,232,971
Total liabilities and stockholders’ equity	$	2,015,218	$	2,008,445


	Thirteen Weeks Ended
		November 28, 2020		November 30, 2019
Net sales		$	231,152	$	152,153
Cost of goods sold		137,111		89,947
Gross profit		94,041		62,206

Operating expenses:
Selling and marketing		25,195		18,434
General and administrative		25,415		18,145
Depreciation and amortization		4,244		2,453
Business transaction costs		—		26,159

Total operating expenses		54,854		65,191

Income (loss) from operations		39,187		(2,985)

Other income (expense):
Interest income		3		1,379
Interest expense		(8,372)		(4,969)

Gain on foreign currency transactions		9		16
Other income		47		37
Total other expense		(8,313)		(3,537)

Income (loss) before income taxes		30,874		(6,522)
Income tax expense (benefit)		8,374		(1,729)
Net income (loss)		$	22,500	$	(4,793)

Other comprehensive income (loss):
Foreign currency translation adjustments		(45)		—
Comprehensive income (loss)		$	22,455	$	(4,793)

Earnings (loss) per share from net income (loss):
Basic		$	0.24	$	(0.05)
Diluted		$	0.23	$	(0.05)
Weighted average shares outstanding:
Basic		95,538,111		89,708,633
Diluted		99,763,119		89,708,633


	Thirteen Weeks Ended
	November 28, 2020		November 30, 2019
Operating activities
Net income (loss)	$	22,500	$	(4,793)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	4,513		2,525
Amortization of deferred financing costs and debt discount	1,077		455
Stock compensation expense	1,110		1,673


Unrealized loss (gain) on foreign currency transactions	9		(16)
Deferred income taxes	4,400		(1,853)

Amortization of operating lease right-of-use asset	1,182		626
Loss on operating lease right-of-use asset impairment	354		—

Other	402		566
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable, net	(8,604)		4,304
Inventories	(18,138)		(9,740)
Prepaid expenses	(558)		(3,513)
Other current assets	2,874		(1,416)
Accounts payable	8,216		(6,533)
Accrued interest	(240)		1,536
Accrued expenses and other current liabilities	(5,127)		8,556
Other assets and liabilities	1,227		(305)
Net cash provided by (used in) operating activities	15,197		(7,928)

Investing activities
Purchases of property and equipment	(93)		(280)
Issuance of note receivable	—		(1,250)
Acquisition of business, net of cash acquired	—		(984,201)
Proceeds from sale of business	5,800		—
Investments in intangible assets	(114)		—
Net cash provided by (used in) investing activities	5,593		(985,731)

Financing activities
Proceeds from option exercises	157		208
Tax payments related to issuance of restricted stock units	(201)		(70)
Payments on finance lease obligations	(78)		(78)



Principal payments of long-term debt	(25,000)		(1,000)
Proceeds from issuance of common stock	—		352,542
Equity issuance costs	—		(3,323)
Proceeds from issuance of long-term debt	—		460,000

Deferred financing costs	—		(8,208)
Net cash (used in) provided by financing activities	(25,122)		800,071

Cash and cash equivalents
Net decrease in cash	(4,332)		(193,588)
Effect of exchange rate on cash	(39)		(42)
Cash at beginning of period	95,847		266,341
Cash and cash equivalents at end of period	$	91,476	$	72,711


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


OR
o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________


	Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Amount		Shares	Amount
Balance at August 29, 2020	95,751,845	$	958	98,234	$	(2,145)	$	1,094,507	$	140,530	$	(879)	$	1,232,971
Net income	—	—		—	—		—		22,500		—		22,500
Stock-based compensation	—	—		—	—		1,110		—		—		1,110
Foreign currency translation adjustments	—	—		—	—		—		—		(45)		(45)

Shares issued upon vesting of restricted stock units	53,908	—		—	—		(201)		—		—		(201)
Exercise of options to purchase common stock	13,118	—		—	—		157		—		—		157
Balance at November 28, 2020	95,818,871	$	958	98,234	$	(2,145)	$	1,095,573	$	163,030	$	(924)	$	1,256,492


Assets acquired:
Cash and cash equivalents	$	4,745
Accounts receivable, net	25,359
Inventories	44,032
Prepaid assets	1,214
Other current assets	3,812
Property and equipment, net(1)	9,843
Intangible assets, net(2)	868,375
Other long-term assets	20,997
Liabilities assumed:
Accounts payable	25,200
Other current liabilities	11,237
Deferred income taxes(3)	10,754
Other long-term liabilities	18,891
Total identifiable net assets	912,295
Goodwill(4)	74,525
Total assets acquired and liabilities assumed	$	986,820


	Thirteen Weeks Ended
(in thousands)	November 28, 2020		November 30, 2019
Net sales(1)	$	95,769	$	17,082


(in thousands)	Goodwill
Balance as of August 29, 2020	$	544,774
Acquisition of business, measurement period adjustment	1,178
Sale of business	(2,818)
Balance as of November 28, 2020	$	543,134


				November 28, 2020
(In thousands)	Useful life			Gross carrying amount		Accumulated amortization		Net carrying amount
Intangible assets with indefinite life:
Brands and trademarks	Indefinite life			$	974,000	$	—	$	974,000
Intangible assets with finite lives:
Customer relationships	15 years			174,000		21,403		152,597
Proprietary recipes and formulas	7 years			7,000		3,381		3,619
Licensing agreements	14 years			22,000		5,313		16,687
Software and website development costs	3	-	5 years	5,302		2,365		2,937
Intangible assets in progress	3	-	5 years	55		—		55
				$	1,182,357	$	32,462	$	1,149,895


(In thousands)	Amortization
Remainder of 2021	$	11,530
2022	15,224
2023	14,938
2024	14,257
2025	13,171
2026 and thereafter	106,720
Total	$	175,840


		Thirteen Weeks Ended
(In thousands)	Statement of Operations Caption	November 28, 2020		November 30, 2019
Operating lease cost:
Lease cost	Cost of goods sold and General and administrative	$	1,498	$	806
Variable lease cost (1)	Cost of goods sold and General and administrative	398		310
Operating lease cost		1,896		1,116

Short term lease cost	General and administrative	—		6

Finance lease cost:
Amortization of right-of-use assets	Cost of goods sold	68		70
Interest on lease liabilities	Interest expense	13		16
Total finance lease cost		81		86

Total lease cost		$	1,977	$	1,208


(In thousands)	Balance Sheet Caption	November 28, 2020		August 29, 2020
Assets
Operating lease right- of-use assets	Other long-term assets	$	24,532	$	25,703
Finance lease right-of-use assets	Property and equipment, net	844		912
Total lease assets		$	25,376	$	26,615

Liabilities
Current:
Operating lease liabilities	Accrued expenses and other current liabilities	$	4,355	$	4,329
Finance lease liabilities	Current maturities of long-term debt	275		271
Long-term:
Operating lease liabilities	Other long-term liabilities	21,882		22,764
Finance lease liabilities	Long-term debt, less current maturities	617		651
Total lease liabilities		$	27,129	$	28,015


(In thousands)	Operating Leases		Finance Leases
Fiscal year ending:
Remainder of 2021	$	4,166	$	235
2022	4,722		313
2023	4,187		278
2024	4,289		145
2025	3,837		—
Thereafter	11,050		—
Total lease payments	32,251		971
Less: Interest	(6,014)		(79)
Present value of lease liabilities	$	26,237	$	892


	November 28, 2020		August 29, 2020
Weighted-average remaining lease term (in years)
Operating leases	6.78		6.97
Finance leases	3.17		3.41
Weighted-average discount rate
Operating leases	5.7	%	5.7	%
Finance leases	5.6	%	5.6	%


	Shares Underlying Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Outstanding as of August 29, 2020	2,615,899	$	14.33
Granted	282,952	20.28
Exercised	(13,118)	12.00
Forfeited	(39,575)	23.08
Outstanding as of November 28, 2020	2,846,158	$	14.81	7.34

Vested and expected to vest as of November 28, 2020	2,846,158	$	14.81	7.34

Exercisable as of November 28, 2020	2,228,465	$	13.22	6.85


	Restricted Stock Units	Weighted average grant-date fair value
Non-vested as of August 29, 2020	208,023	$	22.82
Granted	293,907	21.16
Vested	(63,759)	26.27
Forfeited	(12,530)	23.68
Non-vested as of November 28, 2020	425,641	$	21.13


	Thirteen Weeks Ended
(In thousands, except per share data)	November 28, 2020		November 30, 2019
Basic earnings (loss) per share computation:
Numerator:
Net income (loss)	$	22,500	$	(4,793)
Denominator:
Weighted average common shares - basic	95,538,111		89,708,633
Basic earnings (loss) per share from net income (loss)	$	0.24	$	(0.05)
Diluted earnings (loss) per share computation:
Numerator:
Net income (loss)	$	22,500	$	(4,793)
Denominator:
Weighted average common shares outstanding - basic	95,538,111		89,708,633
Public and Private Warrants	3,216,252		—
Employee stock options	899,375		—
Non-vested shares	109,381		—
Weighted average common shares - diluted	99,763,119		89,708,633
Diluted earnings (loss) per share from net income (loss)	$	0.23	$	(0.05)


	Performance Stock Units	Weighted average grant-date fair value
Non-vested as of August 29, 2020	295,256	$	17.93
Granted	116,309	23.59
Vested	—	—
Forfeited	(26,400)	22.06
Non-vested as of November 28, 2020	385,165	$	19.35


	Shares Underlying SARs	Weighted average exercise price		Weighted average remaining contractual life (in years)
Outstanding as of August 29, 2020	150,000	$	24.20
Granted	—	—
Exercised	—	—
Forfeited	—	—
Outstanding as of November 28, 2020	150,000	$	24.20	8.93

Vested and expected to vest as of November 28, 2020	150,000	$	24.20	8.93

Exercisable as of November 28, 2020	—	$	—	0.00


(in thousands)	Restructuring Liability
Balance as of August 29, 2020	$	4,139
Charges	2,165
Cash payments	(5,966)
Non-cash settlements or adjustments	—
Balance as of November 28, 2020	$	338


Exhibit No.						Document
31.1						Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
31.2						Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
32.1						Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act.
101.INS						XBRL Instance Document
101.SCH						XBRL Taxonomy Extension Schema Document
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						XBRL Taxonomy Extension Label Linkbase Document
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101).