SMPL 10-Q

Simply Good Foods Co (SMPL)

10-Q 2023-06-29 For: 2023-05-27

View Original

Added on April 12, 2026


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)	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations and Comprehensive Income	4
	Consolidated Statements of Cash Flows	5
	Consolidated Statements of Stockholders’ Equity	7
	Notes to Unaudited Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30
Item 4.	Controls and Procedures	30
PART II. Other Information
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	32
	Signatures	33


	May 27, 2023		August 27, 2022
Assets
Current assets:
Cash	$	68,794	$	67,494
Accounts receivable, net	145,430		132,667
Inventories	105,437		125,479
Prepaid expenses	5,759		5,027
Other current assets	24,390		20,934
Total current assets	349,810		351,601

Long-term assets:
Property and equipment, net	24,414		18,157
Intangible assets, net	1,111,865		1,123,258
Goodwill	543,134		543,134
Other long-term assets	50,778		58,099
Total assets	$	2,080,001	$	2,094,249

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	45,867	$	62,149
Accrued interest	43		160
Accrued expenses and other current liabilities	25,166		39,675
Current maturities of long-term debt	199		264
Total current liabilities	71,275		102,248

Long-term liabilities:
Long-term debt, less current maturities	320,900		403,022
Deferred income taxes	117,281		105,676

Other long-term liabilities	39,727		44,639
Total liabilities	549,183		655,585
See commitments and contingencies (Note 9)

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, 101,912,526 and 101,322,834 shares issued at May 27, 2023 and August 27, 2022, respectively	1,019		1,013
Treasury stock, 2,365,100 shares and 1,818,754 shares at cost at May 27, 2023 and August 27, 2022, respectively	(78,451)		(62,003)
Additional paid-in-capital	1,299,318		1,287,224
Retained earnings	311,314		214,381
Accumulated other comprehensive loss	(2,382)		(1,951)
Total stockholders’ equity	1,530,818		1,438,664
Total liabilities and stockholders’ equity	$	2,080,001	$	2,094,249


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	May 27, 2023		May 28, 2022		May 27, 2023		May 28, 2022
Net sales	$	324,792	$	316,531	$	922,254	$	894,514
Cost of goods sold	205,546		197,883		589,284		550,788
Gross profit	119,246		118,648		332,970		343,726

Operating expenses:
Selling and marketing	30,168		32,334		88,650		94,816
General and administrative	30,510		26,721		82,085		76,711
Depreciation and amortization	4,363		4,317		13,035		12,966


Total operating expenses	65,041		63,372		183,770		184,493

Income from operations	54,205		55,276		149,200		159,233

Other income (expense):
Interest income	407		—		660		1
Interest expense	(7,649)		(4,881)		(23,201)		(16,528)
Loss in fair value change of warrant liability	—		—		—		(30,062)

Gain on foreign currency transactions	180		76		74		503
Other income	4		17		10		26
Total other expense	(7,058)		(4,788)		(22,457)		(46,060)

Income before income taxes	47,147		50,488		126,743		113,173
Income tax expense	11,716		11,654		29,810		34,726
Net income	$	35,431	$	38,834	$	96,933	$	78,447

Other comprehensive income:
Foreign currency translation, net of reclassification adjustments	(262)		(72)		(431)		(820)
Comprehensive income	$	35,169	$	38,762	$	96,502	$	77,627

Earnings per share from net income:
Basic	$	0.36	$	0.39	$	0.98	$	0.80
Diluted	$	0.35	$	0.38	$	0.96	$	0.78
Weighted average shares outstanding:
Basic	99,518,546		100,426,227		99,404,174		98,294,114
Diluted	100,909,972		102,237,457		100,847,970		100,190,068


	Thirty-Nine Weeks Ended
	May 27, 2023		May 28, 2022
Operating activities
Net income	$	96,933	$	78,447
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	15,044		14,398
Amortization of deferred financing costs and debt discount	2,011		2,073
Stock compensation expense	10,456		8,691
Change in fair value change of warrant liability	—		30,062
Estimated credit losses	206		148
Unrealized loss (gain) on foreign currency transactions	(74)		(503)
Deferred income taxes	11,696		14,140

Amortization of operating lease right-of-use asset	5,018		4,955

Gain on lease termination	—		(30)

Other	759		345
Changes in operating assets and liabilities:
Accounts receivable, net	(13,334)		(35,269)
Inventories	19,444		(15,006)
Prepaid expenses	(745)		(170)
Other current assets	(1,595)		(37,288)
Accounts payable	(16,115)		5,585
Accrued interest	(117)		154
Accrued expenses and other current liabilities	(15,030)		676
Other assets and liabilities	(4,145)		(4,045)
Net cash provided by operating activities	110,412		67,363

Investing activities
Purchases of property and equipment	(10,108)		(4,696)
Issuance of note receivable	—		(2,400)


Investments in intangible and other assets	(338)		(187)
Net cash used in investing activities	(10,446)		(7,283)

Financing activities
Proceeds from option exercises	5,035		4,343
Tax payments related to issuance of restricted stock units and performance stock units	(2,755)		(3,536)
Payments on finance lease obligations	(217)		(235)
Repurchase of common stock	(16,448)		(28,504)
Principal payments of long-term debt	(81,500)		(50,000)
Deferred financing costs	(2,694)		(544)
Net cash used in financing activities	(98,579)		(78,476)

Cash and cash equivalents
Net increase (decrease) in cash	1,387		(18,396)
Effect of exchange rate on cash	(87)		(229)
Cash at beginning of period	67,494		75,345
Cash and cash equivalents at end of period	$	68,794	$	56,720


(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 27, 2022	101,322,834	$	1,013	1,818,754	$	(62,003)	$	1,287,224	$	214,381	$	(1,951)	$	1,438,664
Net income	—	—		—	—		—		35,860		—		35,860
Stock-based compensation	—	—		—	—		3,237		—		—		3,237
Foreign currency translation adjustments	—	—		—	—		—		—		(222)		(222)
Repurchase of common stock	—	—		546,346	(16,448)		—		—		—		(16,448)
Shares issued upon vesting of restricted stock units and performance stock units	180,342	2		—	—		(2,300)		—		—		(2,298)
Exercise of options and stock appreciation rights to purchase common stock	353,281	4		—	—		4,559		—		—		4,563
Balance at November 26, 2022	101,856,457	$	1,019	2,365,100	$	(78,451)	$	1,292,720	$	250,241	$	(2,173)	$	1,463,356
Net income	—	—		—	—		—		25,642		—		25,642
Stock-based compensation	—	—		—	—		2,739		—		—		2,739
Foreign currency translation adjustments	—	—		—	—		—		—		53		53

Shares issued upon vesting of restricted stock units	4,584	—		—	—		(103)		—		—		(103)
Exercise of options to purchase common stock	12,130	—		—	—		228		—		—		228
Balance at February 25, 2023	101,873,171	$	1,019	2,365,100	(78,451)		1,295,584		$	275,883	(2,120)		1,491,915
Net income	—	—		—	—		—		$	35,431	—		35,431
Stock-based compensation	—	—		—	—		3,844		—		—		3,844

Foreign currency translation adjustments	—	—		—	—		—		—		(262)		(262)
Shares issued upon vesting of restricted stock units	18,960	1		—	—		(355)		—		—		(354)
Exercise of options to purchase common stock	20,395	(1)		—	—		245		—		—		244
Balance at May 27, 2023	101,912,526	1,019		2,365,100	(78,451)		1,299,318		311,314		(2,382)		1,530,818


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
(In thousands)	May 27, 2023		May 28, 2022		May 27, 2023		May 28, 2022
North America (1)
Atkins	$	142,057	$	148,163	$	408,153	$	417,539
Quest	174,477		160,261		490,547		451,128
Total North America	316,534		308,424		898,700		868,667
International	8,258		8,107		23,554		25,847
Total net sales	$	324,792	$	316,531	$	922,254	$	894,514
(1) The North America geographic area consists of net sales substantially related to the United States and there is no individual foreign country to which more than 10% of the Company’s net sales are attributed or that is otherwise deemed individually material.


				May 27, 2023
(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		50,403		123,597
Licensing agreements	13 years			22,000		10,019		11,981
Proprietary recipes and formulas	7 years			7,000		5,881		1,119
Software and website development costs	3	-	5 years	6,022		5,068		954
Intangible assets in progress	3	-	5 years	214		—		214
				$	1,183,236	$	71,371	$	1,111,865


(In thousands)	Amortization
Remainder of 2023	$	3,867
2024	14,846
2025	13,554
2026	13,517
2027	13,517
2028 and thereafter	78,350
Total	$	137,651


(In thousands)	Balance Sheets Caption	May 27, 2023		August 27, 2022
Assets
Operating lease right-of-use assets	Other long-term assets	$	41,444	$	46,460
Finance lease right-of-use assets	Property and equipment, net	178		367
Total lease assets		$	41,622	$	46,827
Liabilities
Current:
Operating lease liabilities	Accrued expenses and other current liabilities	$	7,396	$	6,249
Finance lease liabilities	Current maturities of long-term debt	199		264
Long-term:
Operating lease liabilities	Other long-term liabilities	38,933		44,482
Finance lease liabilities	Long-term debt, less current maturities	3		142
Total lease liabilities		$	46,531	$	51,137


(In thousands)	Operating Leases		Finance Leases
Fiscal year ending:
Remainder of 2023	2,321		61
2024	9,424		145
2025	8,680		—
2026	6,880		—
2027	7,036		—
Thereafter	19,848		—
Total lease payments	54,189		206
Less: Interest	(7,860)		(4)
Present value of lease liabilities	$	46,329	$	202


	May 27, 2023		August 27, 2022
Weighted-average remaining lease term (in years)
Operating leases	6.69		7.27
Finance leases	0.85		1.51
Weighted-average discount rate
Operating leases	4.7	%	4.7	%
Finance leases	5.6	%	5.6	%


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
(In thousands, except per share data)	May 27, 2023		May 28, 2022		May 27, 2023		May 28, 2022
Basic earnings per share computation:
Numerator:
Net income available to common stockholders	$	35,431	$	38,834	$	96,933	$	78,447
Denominator:
Weighted average common shares outstanding - basic	99,518,546		100,426,227		99,404,174		98,294,114
Basic earnings per share from net income	$	0.36	$	0.39	$	0.98	$	0.80

Diluted earnings per share computation:
Numerator:
Net income available for common stockholders	$	35,431	$	38,834	$	96,933	$	78,447

Numerator for diluted earnings per share	$	35,431	$	38,834	$	96,933	$	78,447
Denominator:
Weighted average common shares outstanding - basic	99,518,546		100,426,227		99,404,174		98,294,114

Employee stock options	1,228,922		1,604,847		1,256,898		1,633,278
Non-vested stock units	162,504		206,383		186,898		262,676
Weighted average common shares - diluted	100,909,972		102,237,457		100,847,970		100,190,068
Diluted earnings per share from net income	$	0.35	$	0.38	$	0.96	$	0.78


	Shares underlying options	Weighted average exercise price		Weighted average remaining contractual life (years)
Outstanding as of August 27, 2022	2,776,551	$	18.04	6.10
Granted	285,001	37.73
Exercised	(346,956)	14.51
Forfeited	(35,624)	32.04
Outstanding as of May 27, 2023	2,678,972	$	20.41	5.86
Vested and expected to vest as of May 27, 2023	2,678,972	$	20.41	5.86
Exercisable as of May 27, 2023	2,029,757	$	15.60	4.93


	Units	Weighted average grant-date fair value
Non-vested as of August 27, 2022	453,003	$	30.68
Granted	289,046	37.16
Vested	(203,880)	28.11
Forfeited	(48,883)	33.38
Non-vested as of May 27, 2023	489,286	$	35.31


	Units	Weighted average grant-date fair value
Non-vested as of August 27, 2022	255,023	$	32.82
Granted	50,629	62.55
Vested	(72,452)	27.39
Forfeited	(37,241)	31.00
Non-vested as of May 27, 2023	195,959	$	42.85


	Shares underlying SARs	Weighted average exercise price
Outstanding as of August 27, 2022	150,000	$	24.20
Granted	150,000	37.67
Exercised	(150,000)	24.20
Forfeited	—	—
Outstanding as of May 27, 2023	150,000	$	37.67


Exhibit No.						Document
10.1						Repricing Amendment, dated as of April 25, 2023, by and among Atkins Intermediate Holdings, LLC, a Delaware limited liability company, Conyers Park Acquisition Corp., a Delaware corporation, Simply Good Foods USA, In., a New York corporation, Atkins Nutritional Holdings, Inc., a Delaware corporation, Atkins Nutritional Holdings II, Inc., a Delaware corporation, NCP-ATK Holdings, Inc., a Delaware corporation, the other guarantors party thereto, the financial institutions party thereto as Consenting Lenders and the Replacement Lender and Barclays Bank PLC, as administrative agent.
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 (the instance document does not appear on the Interactive Data File because the XBRL tags are embedded within the Inline XBRL 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).
* Filed herewith.
** Furnished herewith.
† Indicates a management contract or compensatory plan.