Simply Good Foods Co
For the period ended Feb 24, 2024. Filed Apr 4, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Feb 24, 2024 · Filed Apr 4, 2024
SMPL$12.05-4.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-11-25; filed 2024-01-04.
0001702744-24-000005
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-02-24; filed 2024-04-04.
0001702744-24-000022
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 67 previous paragraphs and 81 current paragraphs.
45 unchanged; 21 reworded; 10 added; 1 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 3 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
Interest income. Interest income increased by $0.7 million for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023, due to higher cash balances than prior year period and the increase in interest rates.
Current report
Comparison of Unaudited Results for the Twenty-Six Weeks Ended February 24, 2024, and the Twenty-Six Weeks Ended February 25, 2023
Current report
Net sales. Net sales of $620.9 million represented an increase of $23.4 million, or 3.9%, for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023. The increase in sales was primarily driven by Quest volume growth which offset Atkins softness. North America and International net sales increased 3.9% and 6.5%, respectively, versus last year.
Current report
Cost of goods sold. Cost of goods sold increased $5.2 million, or 1.3%, for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023. The cost of goods sold increase was primarily driven by higher sales volumes in the twenty-six weeks ended February 24, 2024.
Current report
Gross profit. Gross profit increased $18.3 million, or 8.5%, for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023. Additionally, gross profit of $232.0 million, or 37.4% of net sales, for the twenty-six weeks ended February 24, 2024 increased 160 basis points from 35.8% of net sales for the twenty-six weeks ended February 25, 2023, due primarily to lower ingredient and packaging costs.
Current report
Operating expenses. Operating expenses increased $13.4 million, or 11.2%, for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023, due to the following:
Current report
•Selling and marketing. Selling and marketing expenses increased $8.2 million, or 13.9%, for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023, primarily due to increased expenses related to growth initiatives and higher advertising costs.
Current report
•General and administrative. General and administrative expenses increased $5.3 million, or 10.3%, for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023. The increase in general and administrative expense was primarily attributable to a $2.2 million increase in stock-based compensation, $0.1 million increase in executive officer transition costs, and higher employee costs and corporate expenses in the twenty-six weeks ended February 24, 2024.
Current report
•Depreciation and amortization. Depreciation and amortization expenses were $8.6 million and $8.7 million for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023, respectively.
Current report
Adjusted EBITDA. Adjusted EBITDA increased $8.1 million, or 7.3% for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023, driven primarily by higher net gross profit, partially offset by investments in growth initiatives and higher advertising costs. For a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, see “Reconciliation of EBITDA and Adjusted EBITDA” below.
Removed paragraphs (1)
Previous report
We continue to actively monitor the dynamic supply chain environment in the United States and elsewhere as well as consumer purchasing behavior. Current or future governmental policies may increase the risk of inflation and possible economic recession, which could increase the costs of ingredients, packaging, logistics and finished goods for our business as well as negatively effect consumer behavior and demand for our products.
Reworded paragraphs (21)
Previous wording
During the thirteen weeks ended November 25, 2023, our business performance improved as strong Quest sales volume growth more than offset Atkins softness. The Company benefited from lower ingredient and packaging costs which resulted in gross margin expansion versus the year ago period. The Company continues to engage and have discussions with its contract manufacturers and logistics and transportation providers to have its cost structure reflect lower market prices. We believe the Company's strategy and positioning will continue to drive profitable growth for our product offerings and growth within the growing nutritional snacking category.
Current wording
During the thirteen and twenty-six weeks ended February 24, 2024, our business performance improved as strong Quest sales volume more than offset continued softness in Atkins. The Company benefited from lower ingredient and packaging costs which resulted in gross margin expansion versus fiscal 2023. The Company continues to engage and have discussions with its contract manufacturers and logistics and transportation providers to have its cost structure reflect lower market prices. We believe the Company's strategy and positioning will continue to drive profitable growth for our product offerings and growth within the growing nutritional snacking category.
Previous wording
During the thirteen weeks ended November 25, 2023, our net sales increased to $308.7 million compared to $300.9 million for the thirteen weeks ended November 26, 2022, driven by Quest volume growth, which offset softness in Atkins net sales, resulting in a 2.6% increase in our aggregate North America net sales. Gross profit and gross profit margin improved driven by higher sales volumes and lower ingredient and packaging costs.
Current wording
During the thirteen weeks ended February 24, 2024, our net sales increased to $312.2 million compared to $296.6 million for the thirteen weeks ended February 25, 2023, driven by Quest volume growth, which more than offset continued softness in Atkins net sales, resulting in a 5.1% increase in our aggregate North America net sales. Gross profit and gross profit margin improved driven by higher sales volumes and lower ingredient and packaging costs.
Previous wording
Net sales. Net sales were $308.7 million for the thirteen weeks ended November 25, 2023 compared to $300.9 million for the thirteen weeks ended November 26, 2022, representing an increase of $7.8 million, driven primarily by Quest volume growth which offset Atkins softness. North America net sales increased 2.6% in the thirteen weeks ended November 25, 2023 compared to the thirteen weeks ended November 26, 2022, and International net sales increased 0.7% during the same period.
Current wording
Net sales. Net sales were $312.2 million for the thirteen weeks ended February 24, 2024, compared to $296.6 million for the thirteen weeks ended February 25, 2023, representing an increase of $15.6 million, driven primarily by Quest volume growth which offset Atkins softness. North America net sales increased 5.1% in the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023, and International net sales increased 12.2% during the same period.
Previous wording
Cost of goods sold. Cost of goods sold increased $3.7 million, or 1.9%, for the thirteen weeks ended November 25, 2023 compared to the thirteen weeks ended November 26, 2022. The cost of goods sold increase was primarily driven by higher sales volumes in the thirteen weeks ended November 25, 2023.
Current wording
Cost of goods sold. Cost of goods sold increased $1.5 million, or 0.8%, for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023. The cost of goods sold increase was primarily driven by higher sales volumes in the thirteen weeks ended February 24, 2024.
Previous wording
Gross profit. Gross profit increased by $4.1 million, or 3.7%, for the thirteen weeks ended November 25, 2023 compared to the thirteen weeks ended November 26, 2022. Additionally, gross profit of $115.1 million, or 37.3% of net sales, for the thirteen weeks ended November 25, 2023 increased 40 basis points from 36.9% of net sales for the thirteen weeks ended November 26, 2022. The increase in gross profit margin was primarily driven by lower ingredient and packaging costs.
Current wording
Gross profit. Gross profit increased by $14.1 million, or 13.8%, for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023. Additionally, gross profit of $116.9 million, or 37.4% of net sales, for the thirteen weeks ended February 24, 2024, increased 280 basis points from 34.6% of net sales for the thirteen weeks ended February 25, 2023. The increase in gross profit margin was primarily driven by lower ingredient and packaging costs.
Previous wording
Operating expenses. Operating expenses increased $4.8 million, or 8.2%, for the thirteen weeks ended November 25, 2023 compared to the thirteen weeks ended November 26, 2022 due to the following:
Current wording
Operating expenses. Operating expenses increased $8.6 million, or 14.2%, for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023 due to the following:
Previous wording
•Selling and marketing. Selling and marketing expenses increased $3.5 million, or 12.1%, for the thirteen weeks ended November 25, 2023 compared to the thirteen weeks ended November 26, 2022, due to expenses related to growth initiatives.
Current wording
•Selling and marketing. Selling and marketing expenses increased $4.7 million, or 15.7%, for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023, due to increased expenses related to growth initiatives and higher advertising costs.
Previous wording
•General and administrative. General and administrative expenses increased $1.3 million, or 5.1%, for the thirteen weeks ended November 25, 2023 compared to the thirteen weeks ended November 26, 2022. The increase in general and administrative expenses was primarily attributable to $0.7 million of stock based compensation expense, $0.4 million of executive transition costs, and other investments in organizational capabilities.
Current wording
•General and administrative. General and administrative expenses increased $4.0 million, or 15.4%, for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023. The increase in general and administrative expenses was primarily attributable to an increase of $1.5 million in stock-based compensation, higher employee costs and corporate expenses.
Previous wording
•Depreciation and amortization. Depreciation and amortization expenses was $4.4 million for the thirteen weeks ended November 25, 2023 and $4.3 million for the thirteen weeks ended November 26, 2022, respectively.
Current wording
•Depreciation and amortization. Depreciation and amortization expense was $4.2 million for the thirteen weeks ended February 24, 2024 and $4.3 million for the thirteen weeks ended February 25, 2023, respectively.
Previous wording
Interest expense. Interest expense decreased $1.0 million for the thirteen weeks ended November 25, 2023 compared to the thirteen weeks ended November 26, 2022, primarily due to the effect of principal payments reducing the outstanding balance of the Term Facility (as defined below) to $275.0 million as of November 25, 2023, from $400.0 million as of November 26, 2022. The reduction in the outstanding balance of the Term Facility was partially offset by the increase in interest rates on our Term Facility to 8.0% as of November 25, 2023 from 7.7% as of November 26, 2022. Additionally, interest expense related to the amortization of deferred financing costs and debt discount decreased $0.1 million for the thirteen weeks ended November 25, 2023 compared to the thirteen weeks ended November 26, 2022.
Current wording
Interest expense. Interest expense decreased $2.9 million for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023, primarily due to the effect of principal payments reducing the outstanding balance of the Term Facility (as defined below) to $240.0 million as of February 24, 2024, from $365.0 million as of February 25, 2023. Additionally, interest expense related to the amortization of deferred financing costs and debt discount decreased $0.1 million for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023.
Previous wording
Net income. Net income was $35.6 million for the thirteen weeks ended November 25, 2023, a decrease of $0.3 million compared to net income of $35.9 million for the thirteen weeks ended November 26, 2022. Net income benefited by higher gross profit, higher interest income, and lower interest expense, partially offset by growth in marketing expenses, higher stock based compensation expenses, executive transition costs, and higher income tax expense.
Current wording
Net income. Net income was $33.1 million for the thirteen weeks ended February 24, 2024, an increase of $7.5 million compared to net income of $25.6 million for the thirteen weeks ended February 25, 2023. Net income was benefited by higher gross profit, higher interest income, and lower interest expense, partially offset by growth in marketing expenses, higher stock-based compensation expenses, and higher income tax expense.
Previous wording
Adjusted EBITDA. Adjusted EBITDA increased $1.2 million, or 2.0% for the thirteen weeks ended November 25, 2023 compared to the thirteen weeks ended November 26, 2022, driven primarily by higher gross profit, partially offset by growth in marketing expenses. For a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, see “Reconciliation of EBITDA and Adjusted EBITDA” below.
Current wording
Adjusted EBITDA. Adjusted EBITDA increased $6.9 million, or 13.6%, for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023, driven primarily by higher gross profit, partially offset by growth in marketing expenses. For a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, see “Reconciliation of EBITDA and Adjusted EBITDA” below.
Previous wording
Interest income. Interest income increased by $1.0 million for the thirteen weeks ended November 25, 2023 compared to the thirteen weeks ended November 26, 2022, due to higher cash balances, the increase in interest rates, and other sources of interest income.
Current wording
Interest income. Interest income increased by $1.8 million for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023, due to higher cash balances, the increase in interest rates, and other sources of interest income.
Previous wording
Gain on foreign currency transactions. Foreign currency transactions resulted in a gain of $0.2 million and a gain of $0.1 million for the thirteen weeks ended November 25, 2023 and November 26, 2022, respectively. The variance is attributable to changes in foreign currency rates related to our international operations.
Current wording
Gain (loss) on foreign currency transactions. Foreign currency transactions resulted in a gain of $0.2 million and a loss of $0.1 million for the twenty-six weeks ended February 24, 2024, and February 25, 2023, respectively. The variance is attributable to changes in foreign currency rates related to our international operations.
Previous wording
The following unaudited table provides a reconciliation of EBITDA and Adjusted EBITDA to its most directly comparable GAAP measure, which is net income, for the thirteen weeks ended November 25, 2023 and November 26, 2022:
Current wording
The following unaudited table provides a reconciliation of EBITDA and Adjusted EBITDA to its most directly comparable GAAP measure, which is net income, for the thirteen and twenty-six weeks ended February 24, 2024, and February 25, 2023:
Previous wording
We had $121.4 million in cash as of November 25, 2023. We believe our sources of liquidity and capital will be sufficient to finance our continued operations, growth strategy and additional expenses we expect to incur for at least the next twelve months. As circumstances warrant, we may issue debt and/or equity securities from time to time on an opportunistic basis, dependent upon market conditions and available pricing. We make no assurance that we can issue and sell such securities on acceptable terms or at all.
Current wording
We had $135.9 million in cash as of February 24, 2024. We believe our sources of liquidity and capital will be sufficient to finance our continued operations, growth strategy and additional expenses we expect to incur for at least the next twelve months. As circumstances warrant, we may issue debt and/or equity securities from time to time on an opportunistic basis, dependent upon market conditions and available pricing. We make no assurance that we can issue and sell such securities on acceptable terms or at all.
Previous wording
At November 25, 2023, the outstanding balance of the Term Facility was $275.0 million. We are not required to make principal payments on the Term Facility over the twelve months following the period ended November 25, 2023. The outstanding balance of the Term Facility is due upon its maturity in March 2027. As of November 25, 2023, there were no amounts drawn against the Revolving Credit Facility.
Current wording
At February 24, 2024, the outstanding balance of the Term Facility was $240.0 million. We are not required to make principal payments on the Term Facility over the twelve months following the period ended February 24, 2024. The outstanding balance of the Term Facility is due upon its maturity in March 2027. As of February 24, 2024, there were no amounts drawn against the Revolving Credit Facility.
Previous wording
On October 21, 2022, we announced that our Board of Directors had approved the addition of $50.0 million to our stock repurchase program, resulting in authorized stock repurchases of up to an aggregate of $150.0 million. The Company did not repurchase any shares of common stock during the thirteen weeks ended November 25, 2023. During the thirteen weeks ended November 26, 2022, the Company repurchased 546,346 shares of common stock at an average share price of $30.11 per share.
Current wording
On October 21, 2022, we announced that our Board of Directors approved the addition of $50.0 million to our stock repurchase program, resulting in authorized stock repurchases of up to an aggregate of $150.0 million. The Company did not repurchase any shares of common stock during the twenty-six weeks ended February 24, 2024. During the twenty-six weeks ended February 25, 2023, the Company repurchased 546,346 shares of common stock at an average share price of $30.11 per share.
Previous wording
Operating activities. Our net cash provided by operating activities increased $38.8 million to $47.5 million for the thirteen weeks ended November 25, 2023 compared to $8.7 million for the thirteen weeks ended November 26, 2022. The increase in cash provided by operating activities was primarily attributable changes in working capital for the thirteen weeks ended November 25, 2023 as compared to the thirteen weeks ended November 26, 2022. Changes in working capital, comprised of changes in accounts receivable, net, inventories, prepaid expenses, accounts payable, and accrued expenses and other current liabilities, which are driven by the timing of payments and receipts and seasonal building of inventory, consumed cash of $7.7 million in the thirteen weeks ended November 25, 2023 compared to $47.6 million of cash consumed in the thirteen weeks ended November 26, 2022. These increases in cash provided by operating activities were partially offset by the $0.7 million decrease in income from operations to $51.8 million for the thirteen weeks ended November 25, 2023 as compared to $52.5 million for the thirteen weeks ended November 26, 2022. Additionally, cash paid for interest was $2.1 million in the thirteen weeks ended November 25, 2023, which was a decrease of $4.3 million as compared to the $6.4 million paid for interest in the thirteen weeks ended November 26, 2022. Interest income increased by $1.0 million for the thirteen weeks ended November 25, 2023 compared to the thirteen weeks ended November 26, 2022, due to higher cash balances, the increase in interest rates, and other sources of interest income. In addition, cash paid for taxes increased $0.6 million.
Current wording
Operating activities. Our net cash provided by operating activities increased $40.6 million to $94.0 million for the twenty-six weeks ended February 24, 2024, compared to $53.3 million for the twenty-six weeks ended February 25, 2023. The increase in cash provided by operating activities was primarily attributable to changes in working capital for the twenty-six weeks ended February 24, 2024, as compared to the twenty-six weeks ended February 25, 2023. Changes in working capital, comprised of changes in accounts receivable, net, inventories, prepaid expenses, accounts payable, and accrued expenses and other current liabilities, which are driven by the timing of payments and receipts and seasonal building of inventory, consumed cash of $5.5 million in the twenty-six weeks ended February 24, 2024 compared to $36.2 million of cash consumed in the twenty-six weeks ended February 25, 2023, an improvement of $30.7 million. In addition, income from operations increased by $4.9 million to $99.9 million for the twenty-six weeks ended February 24, 2024, as compared to $95.0 million for the twenty-six weeks ended February 25, 2023. Additionally, cash paid for interest was $11.2 million in the twenty-six weeks ended February 24, 2024, which was a decrease of $3.1 million as compared to the $14.3 million paid for interest in the twenty-six weeks ended February 25, 2023. Interest income increased by $1.8 million for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023, due to higher cash balances, the increase in interest rates, and other sources of interest income. In addition, cash paid for taxes decreased $0.9 million.
Previous wording
Investing activities. Our net cash used in investing activities was $0.8 million for the thirteen weeks ended November 25, 2023 compared to $1.2 million for the thirteen weeks ended November 26, 2022. Our net cash used in investing activities for the thirteen weeks ended November 25, 2023 primarily comprised $0.7 million of purchases of property and equipment. The $1.2 million of net cash used in investing activities for the thirteen weeks ended November 26, 2022 primarily comprised $1.2 million of purchases of property and equipment.
Current wording
Investing activities. Our net cash used in investing activities was $1.3 million for the twenty-six weeks ended February 24, 2024 compared to $1.9 million for the twenty-six weeks ended February 25, 2023. Our net cash used in investing activities for the twenty-six weeks ended February 24, 2024, primarily comprised $1.1 million of purchases of property and equipment. The $1.9 million of net cash used in investing activities for the twenty-six weeks ended February 25, 2023, primarily comprised $1.7 million of purchases of property and equipment.
Previous wording
Financing activities. Our net cash used in financing activities was $13.1 million for the thirteen weeks ended November 25, 2023 compared to $20.8 million for the thirteen weeks ended November 26, 2022. Net cash used in financing activities for the thirteen weeks ended November 25, 2023 primarily consisted of $10.0 million in principal payments on the Term Facility, and $3.6 million in tax payments related to issuance of restricted stock units and performance stock units, partially offset by $0.6 million of cash proceeds received from the partial repayment of an outstanding note receivable. Net cash used in financing activities for the thirteen weeks ended November 26, 2022 primarily consisted of $16.4 million in repurchases of common stock, $6.5 million in principal payments on the Term Facility, and $2.3 million in tax payments related to issuance of restricted stock units and performance stock units, partially offset by $4.6 million of cash proceeds received from option exercises.
Current wording
Financing activities. Our net cash used in financing activities was $44.7 million for the twenty-six weeks ended February 24, 2024, compared to $55.7 million for the twenty-six weeks ended February 25, 2023. Net cash used in financing activities for the twenty-six weeks ended February 24, 2024, primarily consisted of $45.0 million in principal payments on the Term Facility, and $3.8 million in tax payments related to issuance of restricted stock units and performance stock units, partially offset by $3.0 million of cash proceeds received from option exercises, and $1.2 million of cash proceeds received from the partial repayment of an outstanding note receivable. Net cash used in financing activities for the twenty-six weeks ended February 25, 2023, primarily consisted of $16.4 million in repurchases of common stock, $41.5 million in principal payments on the Term Facility, and $2.4 million in tax payments related to issuance of restricted stock units and performance stock units, partially offset by $4.8 million of cash proceeds received from option exercises.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
(Loss) on foreign currency transactions. Foreign currency transactions resulted in an immaterial loss and a loss of $0.2 million for the thirteen weeks ended February 24, 2024, and February 25, 2023, respectively. The variance is attributable to changes in foreign currency rates related to our international operations.
Current report — wording carried from elsewhere
The following unaudited table presents, for the periods indicated, selected information from our Consolidated Statements of Operations and Comprehensive Income, including information presented as a percentage of net sales:
Current report — wording carried from elsewhere
Interest expense. Interest expense decreased $3.9 million for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023, primarily due to the effect of principal payments reducing the outstanding balance of the Term Facility (as defined below) to $240.0 million as of February 24, 2024, from $365.0 million as of February 25, 2023. Additionally, interest expense related to the amortization of deferred financing costs and debt discount decreased $0.2 million for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023.
Current report — wording carried from elsewhere
Income tax expense. Income tax expense increased $3.7 million for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023. The increase in our income tax expense was primarily driven by higher income from operations and changes in permanent differences.
Current report — wording carried from elsewhere
Net income. Net income was $68.7 million for the twenty-six weeks ended February 24, 2024, an increase of $7.2 million compared to net income of $61.5 million for the twenty-six weeks ended February 25, 2023. Net income was benefited by higher gross profit, higher interest income, and lower interest expense, and was partially offset by growth in marketing expenses, higher stock-based compensation expenses, and higher income tax expense.