Simply Good Foods Co 10-Q for FY2024 Q3

Simply Good Foods Co (SMPL)

10-Q 2024-06-27 For: 2024-05-25

Added on April 12, 2026

About this 10-Q

Simply Good Foods Co filed this 10-Q on June 27, 2024, covering the quarter ended May 25, 2024 (FY2024 Q3).

Headline figures

Quarter ended May 25, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $334.76M; up 3.1% from $324.79M a year earlier
Net income: $41.33M; up 16.7% from net income of $35.43M a year earlier
Diluted EPS: $0.41; up 17.1% from $0.35 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)	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	19
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29
Item 4.	Controls and Procedures	29
PART II. Other Information
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
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 25, 2024		August 26, 2023
Assets
Current assets:
Cash	$	208,681	$	87,715
Accounts receivable, net	146,281		145,078
Inventories	105,921		116,591
Prepaid expenses	8,645		6,294
Other current assets	11,823		15,974
Total current assets	481,351		371,652

Long-term assets:
Property and equipment, net	22,037		24,861
Intangible assets, net	1,096,538		1,108,119
Goodwill	543,134		543,134
Other long-term assets	42,570		49,318
Total assets	$	2,185,630	$	2,097,084

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	56,504	$	52,712
Accrued interest	1,372		1,940
Accrued expenses and other current liabilities	34,823		35,062
Current maturities of long-term debt	2		143
Total current liabilities	92,701		89,857

Long-term liabilities:
Long-term debt, less current maturities	237,661		281,649
Deferred income taxes	128,549		116,133

Other long-term liabilities	33,407		38,346
Total liabilities	492,318		525,985
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, 102,500,950 and 101,929,868 shares issued at May 25, 2024 and August 26, 2023, respectively	1,025		1,019
Treasury stock, 2,365,100 shares and 2,365,100 shares at cost at May 25, 2024 and August 26, 2023, respectively	(78,451)		(78,451)
Additional paid-in-capital	1,315,005		1,303,168
Retained earnings	457,974		347,956
Accumulated other comprehensive loss	(2,241)		(2,593)
Total stockholders’ equity	1,693,312		1,571,099
Total liabilities and stockholders’ equity	$	2,185,630	$	2,097,084


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	May 25, 2024		May 27, 2023		May 25, 2024		May 27, 2023
Net sales	$	334,757	$	324,792	$	955,634	$	922,254
Cost of goods sold	201,131		205,546		590,020		589,284
Gross profit	133,626		119,246		365,614		332,970

Operating expenses:
Selling and marketing	36,464		30,168		103,097		88,650
General and administrative	31,543		30,510		88,426		82,085
Depreciation and amortization	4,142		4,363		12,711		13,035
Business transaction costs	2,703		—		2,703		—


Total operating expenses	74,852		65,041		206,937		183,770

Income from operations	58,774		54,205		158,677		149,200

Other income (expense):
Interest income	881		407		2,895		660
Interest expense	(5,028)		(7,649)		(16,658)		(23,201)


(Loss) gain on foreign currency transactions	(12)		180		191		74
Other income	102		4		108		10
Total other expense	(4,057)		(7,058)		(13,464)		(22,457)

Income before income taxes	54,717		47,147		145,213		126,743
Income tax expense	13,383		11,716		35,195		29,810
Net income	$	41,334	$	35,431	$	110,018	$	96,933

Other comprehensive income:
Foreign currency translation, net of reclassification adjustments	95		(262)		352		(431)
Comprehensive income	$	41,429	$	35,169	$	110,370	$	96,502

Earnings per share from net income:
Basic	$	0.41	$	0.36	$	1.10	$	0.98
Diluted	$	0.41	$	0.35	$	1.09	$	0.96
Weighted average shares outstanding:
Basic	100,024,230		99,518,546		99,852,203		99,404,174
Diluted	101,270,163		100,909,972		101,240,471		100,847,970


	Thirty-Nine Weeks Ended
	May 25, 2024		May 27, 2023
Operating activities
Net income	$	110,018	$	96,933
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	15,871		15,044
Amortization of deferred financing costs and debt discount	1,213		2,011
Stock compensation expense	13,209		10,456


Estimated credit (gains) losses	(167)		206
Unrealized loss on foreign currency transactions	(191)		(74)
Deferred income taxes	12,416		11,696

Amortization of operating lease right-of-use asset	5,265		5,018



Other	2,329		759
Changes in operating assets and liabilities:
Accounts receivable, net	(716)		(13,334)
Inventories	9,423		19,444
Prepaid expenses	(2,309)		(745)
Other current assets	2,248		(1,595)
Accounts payable	3,370		(16,115)
Accrued interest	(568)		(117)
Accrued expenses and other current liabilities	(705)		(15,030)
Other assets and liabilities	(3,951)		(4,145)
Net cash provided by operating activities	166,755		110,412

Investing activities
Purchases of property and equipment	(1,838)		(10,108)



Investments in intangible and other assets	(507)		(338)
Net cash used in investing activities	(2,345)		(10,446)

Financing activities
Proceeds from option exercises	4,292		5,035
Tax payments related to issuance of restricted stock units and performance stock units	(4,818)		(2,755)
Payments on finance lease obligations	(143)		(217)
Cash received on repayment of note receivable	2,100		—
Repurchase of common stock	—		(16,448)
Principal payments of long-term debt	(45,000)		(81,500)
Deferred financing costs	—		(2,694)
Net cash used in financing activities	(43,569)		(98,579)

Cash and cash equivalents
Net increase in cash	120,841		1,387
Effect of exchange rate on cash	125		(87)
Cash at beginning of period	87,715		67,494
Cash and cash equivalents at end of period	$	208,681	$	68,794


(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 26, 2023	101,929,868	$	1,019	2,365,100	$	(78,451)	$	1,303,168	$	347,956	$	(2,593)	$	1,571,099
Net income	—	—		—	—		—		35,561		—		35,561
Stock-based compensation	—	—		—	—		3,888		—		—		3,888
Foreign currency translation adjustments	—	—		—	—		—		—		272		272
Repurchase of common stock	—	—		—	—		—		—		—		—
Shares issued upon vesting of restricted stock units and performance stock units	245,365	3		—	—		(3,645)		—		—		(3,642)
Exercise of options to purchase common stock	—	—		—	—		—		—		—		—
Balance at November 25, 2023	102,175,233	$	1,022	2,365,100	$	(78,451)	$	1,303,411	$	383,517	$	(2,321)	$	1,607,178
Net income	—	—		—	—		—		33,123		—		33,123
Stock-based compensation	—	—		—	—		4,288		—		—		4,288
Foreign currency translation adjustments	—	—		—	—		—		—		(15)		(15)
Repurchase of common stock	—	—		—	—		—		—		—		—
Shares issued upon vesting of restricted stock units	5,285	—		—	—		(107)		—		—		(107)
Exercise of options to purchase common stock	173,100	2		—	—		3,013		—		—		3,015
Balance at February 24, 2024	102,353,618	$	1,024	2,365,100	$	(78,451)	$	1,310,605	$	416,640	$	(2,336)	$	1,647,482
Net income	—	—		—	—		—		$	41,334	—		41,334
Stock-based compensation	—	—		—	—		4,193		—		—		4,193
Foreign currency translation adjustments	—	—		—	—		—		—		95		95
Repurchase of common stock	—	—		—	—		—		—		—		—
Shares issued upon vesting of restricted stock units	63,553	—		—	—		(1,070)		—		—		(1,070)
Exercise of options to purchase common stock	83,779	1		—	—		1,277		—		—		1,278
Balance at May 25, 2024	102,500,950	1,025		2,365,100	(78,451)		1,315,005		457,974		(2,241)		1,693,312


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
(In thousands)	May 25, 2024		May 27, 2023		May 25, 2024		May 27, 2023
North America (1)
Atkins	$	128,602	$	142,057	$	370,855	$	408,153
Quest	198,096		174,477		560,433		490,547
Total North America	326,698		316,534		931,288		898,700
International	8,059		8,258		24,346		23,554
Total net sales	$	334,757	$	324,792	$	955,634	$	922,254
(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 25, 2024
(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		62,003		111,997
Licensing agreements	13 years			22,000		11,936		10,064
Proprietary recipes and formulas	7 years			7,000		6,881		119
Software and website development costs	3	-	5 years	4,909		4,909		—
Intangible assets in progress	3	-	5 years	358		—		358
				$	1,182,267	$	85,729	$	1,096,538


(In thousands)	Amortization
Remainder of 2024	$	3,814
2025	13,517
2026	13,517
2027	13,517
2028	13,517
2029 and thereafter	64,298
Total	$	122,180


(In thousands)	Balance Sheets Caption	May 25, 2024		August 26, 2023
Assets
Operating lease right-of-use assets	Other long-term assets	$	34,756	$	40,022
Finance lease right-of-use assets	Property and equipment, net	2		125
Total lease assets		$	34,758	$	40,147
Liabilities
Current:
Operating lease liabilities	Accrued expenses and other current liabilities	$	7,770	$	7,566
Finance lease liabilities	Current maturities of long-term debt	2		143
Long-term:
Operating lease liabilities	Other long-term liabilities	31,492		37,272

Total lease liabilities		$	39,264	$	44,981


(In thousands)	Operating Leases		Finance Leases
Fiscal year ending:
Remainder of 2024	2,396		2
2025	8,750		—
2026	6,952		—
2027	7,110		—
2028	6,447		—
Thereafter	13,496		—
Total lease payments	45,151		2
Less: Interest	(5,889)		—
Present value of lease liabilities	$	39,262	$	2


	May 25, 2024		August 26, 2023
Weighted-average remaining lease term (in years)
Operating leases	5.77		6.24
Finance leases	0.17		0.61
Weighted-average discount rate
Operating leases	4.5	%	4.4	%
Finance leases	5.6	%	5.6	%


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
(In thousands, except per share data)	May 25, 2024		May 27, 2023		May 25, 2024		May 27, 2023
Basic earnings per share computation:
Numerator:
Net income available to common stockholders	$	41,334	$	35,431	$	110,018	$	96,933
Denominator:
Weighted average common shares outstanding - basic	100,024,230		99,518,546		99,852,203		99,404,174
Basic earnings per share from net income	$	0.41	$	0.36	$	1.10	$	0.98

Diluted earnings per share computation:
Numerator:
Net income available for common stockholders	$	41,334	$	35,431	$	110,018	$	96,933

Numerator for diluted earnings per share	$	41,334	$	35,431	$	110,018	$	96,933
Denominator:
Weighted average common shares outstanding - basic	100,024,230		99,518,546		99,852,203		99,404,174

Employee stock options	1,055,882		1,228,922		1,143,855		1,256,898
Non-vested stock units	190,051		162,504		244,413		186,898
Weighted average common shares - diluted	101,270,163		100,909,972		101,240,471		100,847,970
Diluted earnings per share from net income	$	0.41	$	0.35	$	1.09	$	0.96


	Shares underlying options	Weighted average exercise price		Weighted average remaining contractual life (years)
Outstanding as of August 26, 2023	2,668,462	$	20.41	5.56
Granted	17,633	33.02
Exercised	(256,879)	16.71
Forfeited	(9,954)	39.38
Outstanding as of May 25, 2024	2,419,262	$	20.82	4.91
Vested and expected to vest as of May 25, 2024	2,419,262	$	20.82	4.91
Exercisable as of May 25, 2024	1,934,142	$	16.70	4.13


	Units	Weighted average grant-date fair value
Non-vested as of August 26, 2023	514,498	$	35.59
Granted	251,100	36.82
Vested	(251,841)	32.64
Forfeited	(11,471)	38.77
Non-vested as of May 25, 2024	502,286	$	37.61


	Units	Weighted average grant-date fair value
Non-vested as of August 26, 2023	191,779	$	42.41
Granted	181,853	38.77
Vested	(189,884)	21.52
Forfeited	(1,008)	57.43
Non-vested as of May 25, 2024	182,740	$	59.06


Date:	June 27, 2024	By:	/s/ Geoff E. Tanner
		Name:	Geoff E. Tanner
		Title:	Chief Executive Officer, President and Director
			(Principal Executive Officer)


	Shares underlying SARs	Weighted average exercise price
Outstanding as of August 26, 2023	150,000	$	37.67
Granted	—	—
Exercised	—	—
Forfeited	—	—
Outstanding as of May 25, 2024	150,000	$	37.67


Exhibit No.						Document
2.1						Stock Purchase Agreement, dated as of April 29, 2024, by and among Simply Good Foods USA, Inc., a New York corporation, Only What You Need, Inc., a Delaware corporation, and Safe Brands, LLC, a Delaware limited liability company (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on April 30, 2024).
10.1						The Simply Good Foods Company Second Amended and Restated Executive Severance Compensation Plan, dated April 16, 2024 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on April 22, 2024).
10.2						The Simply Good Foods Company 2017 Omnibus Incentive Plan, as amended from time to time Policy Regarding Treatment of Awards in the Event of an Awardee’s Retirement, Approved as of April 16, 2024 (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on April 22, 2024).
10.3						Amendment No. 6 (Incremental Facility Amendment), dated as of June 13, 2024, among Atkins Intermediate Holdings, LLC, a Delaware limited liability company, Conyers Park Acquisition Corp., a Delaware corporation, Simply Good Foods USA, Inc., a New York corporation, Atkins Nutritionals Holdings, Inc., a Delaware corporation, Atkins Nutritionals Holdings II, Inc., a Delaware corporation, NCP-ATK Holdings, Inc., a Delaware corporation, the lenders party thereto and Barclays Bank PLC, as administrative agent (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on June 17, 2024).
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.


Date:	June 27, 2024	By:	/s/ Shaun P. Mara
		Name:	Shaun P. Mara
		Title:	Chief Financial Officer
			(Principal Financial Officer)