What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-04-06 compared with 2022-01-05 · 171 added, 142 removed, 386 unchanged (45% of the section changed)

3 unchanged sentences

(Unaudited, dollars in thousands, except share and per share data)

November 27, 2021 August 28, 2021

February 26, 2022 August 28, 2021

Current assets:

39 unchanged sentences

Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued

Common stock, $0.01 par value, 600,000,000 shares authorized, 96,130,441 and 95,882,908 shares issued at November 27, 2021 and August 28, 2021, respectively 961 959

Treasury stock, 98,234 shares at cost at November 27, 2021 and August 28, 2021 ( 2,145 ) ( 2,145 )

Common stock, $0.01 par value, 600,000,000 shares authorized, 101,070,881 and 95,882,908 shares issued at February 26, 2022 and August 28, 2021, respectively 1,011 959

Treasury stock, 669,755 shares and 98,234 shares at cost at February 26, 2022 and August 28, 2021, respectively ( 22,539 ) ( 2,145 )

Additional paid-in-capital

9 unchanged sentences

The Simply Good Foods Company and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited, dollars in thousands, except share and per share data)

Thirteen Weeks Ended

November 27, 2021 November 28, 2020

Thirteen Weeks Ended Twenty-Six Weeks Ended

February 26, 2022 February 27, 2021 February 26, 2022 February 27, 2021

Net sales $ 296,718 $ 230,607 $ 577,983 $ 461,759

10 unchanged sentences

Interest expense ( 5,276 ) ( 7,995 ) ( 11,647 ) ( 16,367 )

(Loss) gain in fair value change of warrant liability ( 17,317 ) 20,453

(Loss) gain on foreign currency transactions ( 353 ) 9

Loss in fair value change of warrant liability ( 12,745 ) ( 45,334 ) ( 30,062 ) ( 24,881 )

Gain on foreign currency transactions 780 975 427 984

Other income — 112 9 159

Total other (expense) income ( 24,031 ) 12,140

Income before income taxes 33,975 51,327

Total other expense ( 17,241 ) ( 52,242 ) ( 41,272 ) ( 40,102 )

Income (loss) before income taxes 28,710 ( 18,901 ) 62,685 32,426

Income tax expense 10,249 7,313 23,072 15,687

Net income $ 21,152 $ 42,953

Other comprehensive income:

Foreign currency translation adjustments $ (40) $ (45)

Comprehensive income $ 21,112 $ 42,908

Earnings per share from net income:

Net income (loss) $ 18,461 $ ( 26,214 ) $ 39,613 $ 16,739

Other comprehensive income (loss):

Foreign currency translation, net of reclassification adjustments $ ( 708 ) $ 243 $ ( 748 ) $ 198

Comprehensive income (loss) $ 17,753 $ ( 25,971 ) $ 38,865 $ 16,937

Earnings (loss) per share from net income (loss):

Basic $ 0.19 $ ( 0.27 ) $ 0.41 $ 0.17

7 unchanged sentences

(Unaudited, dollars in thousands)

Thirteen Weeks Ended

November 27, 2021 November 28, 2020

Twenty-Six Weeks Ended

February 26, 2022 February 27, 2021

Operating activities

$ 39,613 $ 16,739

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 9,572 9,021

1 unchanged sentence

Stock compensation expense 5,697 3,594

Loss (gain) in fair value change of warrant liability 17,317 ( 20,453 )

Loss in fair value change of warrant liability 30,062 24,881

Estimated credit losses ( 5 ) —

Unrealized loss on foreign currency transactions 353 9

Unrealized gain on foreign currency transactions ( 427 ) ( 985 )

Deferred income taxes 11,814 8,119

12 unchanged sentences

Other assets and liabilities ( 3,273 ) ( 1,144 )

Net cash (used in) provided by operating activities

Net cash provided by operating activities

30,323 39,764

10 unchanged sentences

Payments on finance lease obligations ( 157 ) ( 168 )

Repurchase of common stock ( 20,394 ) —

Principal payments of long-term debt ( 25,000 ) ( 50,000 )

Deferred financing costs ( 544 ) —

Net cash used in financing activities

6 unchanged sentences

$ 51,469 $ 91,307

Thirteen Weeks Ended

November 27, 2021 November 28, 2020

Twenty-Six Weeks Ended

February 26, 2022 February 27, 2021

Supplemental disclosures of cash flow information

6 unchanged sentences

Operating lease right-of-use assets exchanged for operating lease liabilities $ 5,551 $ 316

Issuance of common stock in extinguishment of warrant liabilities $ 189,897 $ —

See accompanying notes to the unaudited condensed consolidated financial statements.

11 unchanged sentences

Balance at November 27, 2021 96,130,441 $ 961 98,234 $ ( 2,145 ) $ 1,084,690 $ 126,959 $ ( 858 ) $ 1,209,607

Net income — — — — — 18,461 — 18,461

Stock-based compensation — — — — 3,092 — — 3,092

Foreign currency translation adjustments — — — — — — 439 439

Reclassification adjustment for currency translation gains related to the liquidation of foreign entities — — — — — — ( 1,147 ) ( 1,147 )

Repurchase of common stock — — 571,521 ( 20,394 ) — — — ( 20,394 )

Warrant Conversion 4,830,761 48 — — 189,849 — — 189,897

Shares issued upon vesting of restricted stock units 9,679 1 — — ( 102 ) — — ( 101 )

Exercise of options to purchase common stock 100,000 1 — — 1,199 — — 1,200

Balance at February 26, 2022 101,070,881 $ 1,011 669,755 $ ( 22,539 ) $ 1,278,728 $ 145,420 $ ( 1,566 ) $ 1,401,054

Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total

7 unchanged sentences

Balance at November 28, 2020 95,818,871 $ 958 98,234 $ ( 2,145 ) $ 1,077,538 $ 107,880 $ ( 924 ) $ 1,183,307

Net income — — — — — ( 26,214 ) — ( 26,214 )

Stock-based compensation — — — — 2,484 — — 2,484

Foreign currency translation adjustments — — — — — — 243 243

Shares issued upon vesting of restricted stock units 7,034 — — — ( 51 ) — — ( 51 )

Exercise of options to purchase common stock 30,810 1 — — 369 — — 370

Balance at February 27, 2021 95,856,715 $ 959 98,234 $ ( 2,145 ) $ 1,080,340 $ 81,666 $ ( 681 ) $ 1,160,139

See accompanying notes to the unaudited condensed consolidated financial statements.

23 unchanged sentences

The results reported in these unaudited interim condensed consolidated financial statements are not necessarily indicative of the results that may be reported for the entire fiscal year and should be read in conjunction with the Company’s consolidated financial statements for the fiscal year ended August 28, 2021, included in the Company’s Annual Report on Form 10-K (“Annual Report”) filed with the SEC on October 26, 2021.

The Company remains uncertain of the ultimate effect COVID-19 could have on its business notwithstanding the distribution of several U.S.

government approved vaccines, the availability of booster inoculations and the easing of movement restrictions relative to the onset of COVID-19.

This uncertainty stems from the potential for, among other things, (i) the rise of COVID-19 mutations that have resulted in increased rates of reported cases for which currently approved vaccines are or may not be as effective, (ii) unexpected supply chain disruptions, including disruptions resulting from labor shortages or other human capital challenges, (iii) changes to customer operations, (iv) a reversal in recently improving consumer purchasing and consumption behavior, and (v) the closure of or reduced access to customer establishments.

While the Company’s business has continued to improve from the end of fiscal year 2021, driven in part by the increasing normalization of consumer mobility and shopper traffic patterns in brick-and-mortar retailers versus prior periods that were pressured by COVID-19 movement restrictions, the ultimate effect COVID-19, supply chain challenges, and other related cost pressures on the business continues to be not fully known.

Additionally, management is monitoring the conflict in Ukraine and any broader economic effects from the crisis, especially on the availability and cost of raw materials that are produced in this region.

Factors contributing to this uncertainty, among other things, include (i) continued supply chain disruptions, including disruptions resulting from labor shortages and other cost pressures, (ii) changes to customer operations, (iii) a reversal in recently improving consumer purchasing and consumption behavior, and (iv) unforeseen business disruptions or other effects due to current global geopolitical tensions, including relating to Ukraine.

Summary of Significant Accounting Policies

5 unchanged sentences

The amendments of this ASU should be applied on a prospective basis.

On January 21, 2022, the Company entered into a repricing amendment (the “2022 Repricing Amendment”) to its credit agreement with Barclays Bank PLC and other parties (as amended to date, the “Credit Agreement”), as described in Note 5, Long-Term Debt and Line of Credit.

In addition to replacing the London Interbank Offered Rate (“LIBOR”) as the Credit Agreement’s reference rate with the Secured Overnight Financing Rate (“SOFR”), the 2022 Repricing Amendment contemporaneously modified other terms that changed, or had the potential to change, the amount or timing of contractual cash flows as contemplated by the guidance in ASU 2020-04.

As such, the contract modifications related to the 2022 Repricing Amendment were outside of the scope of the optional guidance in ASU 2020-04.

The Company will continue to monitor the effects of rate reform, if any, on any new or amended contracts through December 31, 2022.

13 unchanged sentences

The following is a summary of revenue disaggregated by geographic area and core brands:

Thirteen Weeks Ended

(In thousands) November 27, 2021 November 28, 2020

Thirteen Weeks Ended Twenty-Six Weeks Ended

(In thousands) February 26, 2022 February 27, 2021 February 26, 2022 February 27, 2021

North America (1)

Atkins $ 135,582 $ 114,155 $ 269,376 $ 236,916

138,294 95,769

Quest 152,573 105,025 290,867 200,794

Total North America 288,155 219,180 560,243 437,710

2 unchanged sentences

(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.

(2) Quest net sales are primarily in North America.

Charges related to credit loss on accounts receivables from transactions with external customers were immaterial for the thirteen weeks ended November 27, 2021 and approximately $ 0.1 million for the thirteen weeks ended November 28, 2020.

As of November 27, 2021 and August 28, 2021, the allowances for doubtful accounts related to these accounts receivable were $ 1.2 million and $ 1.1 million, respectively.

Charges related to credit loss on accounts receivables from transactions with external customers were immaterial for the thirteen and twenty-six weeks ended February 26, 2022 and February 27, 2021.

As of February 26, 2022 and August 28, 2021, the allowances for doubtful accounts related to these accounts receivable were $ 1.1 million.

Goodwill and Intangibles

As of November 27, 2021 and August 28, 2021, Goodwill in the Condensed Consolidated Balance Sheets was $ 543.1 million.

There were no impairment charges related to goodwill during the thirteen weeks ended November 27, 2021 or since the inception of the Company.

As of February 26, 2022 and August 28, 2021, Goodwill in the Condensed Consolidated Balance Sheets was $ 543.1 million.

There were no impairment charges related to goodwill during the thirteen and twenty-six weeks ended February 26, 2022 or since the inception of the Company.

Intangible assets, net in the Condensed Consolidated Balance Sheets consists of the following:

November 27, 2021

February 26, 2022

(In thousands) Useful life Gross carrying amount Accumulated amortization Net carrying

18 unchanged sentences

$ 1,182,863 $ 43,822 $ 1,139,041

Changes in Intangible assets, net during the thirteen weeks ended November 27, 2021 were primarily related to recurring amortization expense.

Amortization expense related to intangible assets was $ 4.0 million and $ 3.9 million for the thirteen weeks ended November 27, 2021 and November 28, 2020, respectively.

There were no impairment charges related to intangible assets during the thirteen weeks ended November 27, 2021 and November 28, 2020.

Changes in Intangible assets, net during the twenty-six weeks ended February 26, 2022 were primarily related to recurring amortization expense.

Amortization expense related to intangible assets was $ 4.0 million and $ 3.9 million for the thirteen weeks ended February 26, 2022 and February 27, 2021, respectively, and $ 7.9 million and $ 7.7 million for the twenty-six weeks ended February 26, 2022 and February 27, 2021, respectively.

There were no impairment charges related to intangible assets during the thirteen and twenty-six weeks ended February 26, 2022 and February 27, 2021.

Estimated future amortization for each of the next five fiscal years and thereafter is as follows:

5 unchanged sentences

On July 7, 2017, the Company entered into a credit agreement with Barclays Bank PLC and other parties (as amended to date, the “Credit Agreement”).

The Credit Agreement at that time provided for (i) a term facility of $ 200.0 million (“Term Facility”) with a seven -

year maturity and (ii) a revolving credit facility of up to $ 75.0 million (the “Revolving Credit Facility”) with a five -year maturity.

The Credit Agreement at that time provided for (i) a term facility of $ 200.0 million (“Term Facility”) with a seven -year maturity and (ii) a revolving credit facility of up to $ 75.0 million (the “Revolving Credit Facility”) with a five -year maturity.

Substantially concurrent with the consummation of the business combination between Conyers Park Acquisition Corp.

1 unchanged sentence

on July 7, 2017, the full $ 200.0 million of the Term Facility (the “Term Loan”) was drawn.

The interest rate per annum is based on either (i) a base rate equaling the higher of (a) the “prime rate,” (b) the federal funds effective rate plus 0.50 %, or (c) the Euro-currency rate applicable for an interest period of one month plus 1.00 % plus (x) 3.00 % margin for the Term Loan or (y) 2.00 % margin for the Revolving Credit Facility, or (ii) London Interbank Offered Rate (“LIBOR”) adjusted for statutory reserve requirements plus (x) 4.00 % margin for the Term Loan subject to a floor of 1.00 % or (y) 3.00 % margin for the Revolving Credit Facility.

On November 7, 2019, the Company entered into a second amendment (the “Incremental Facility Amendment”) to the Credit Agreement to increase the principal borrowed on the Term Facility by $ 460.0 million.

The Term Facility together with the incremental borrowing make up the Initial Term Loans (as defined in the Incremental Facility Amendment).

The Incremental Facility Amendment was executed to partially finance the acquisition of Quest Nutrition, LLC on November 7, 2019.

No amounts under the Term Facility were repaid as a result of the execution of the Incremental Facility Amendment.

Effective as of December 16, 2021, the Company entered into a third amendment (the “Extension Amendment”) to the Credit Agreement.

The Extension Amendment provided for an extension of the stated maturity date of the Revolving Commitments and Revolving Loans (each as defined in the Credit Agreement) from July 7, 2022 to the earlier of (i) 91 days prior to the maturity date of the Initial Term Loans on July 7, 2024 and (ii) December 16, 2026.

On January 21, 2022, the Company entered into a repricing amendment (the “2022 Repricing Amendment”) to the Credit Agreement.

The 2022 Repricing Amendment, among other things, (i) reduced the interest rate per annum applicable to the Initial Term Loans outstanding under the Credit Agreement immediately prior to the effective date of the 2022 Repricing Amendment, (ii) reset the prepayment premium for the existing Initial Term Loans to apply to Repricing Transactions (as defined in the Credit Agreement) that occur within six months after the effective date of the 2022 Repricing Amendment, and (iii) implemented the Secured Overnight Financing Rate (“SOFR”) and related replacement provisions for the London Interbank Offered Rate (“LIBOR”).

Effective as of the 2022 Repricing Amendment dated January 21, 2022, the interest rate per annum is based on either:

A base rate equaling the higher of (a) the “prime rate,” (b) the federal funds effective rate plus 0.50 %, or (c) the Adjusted Term SOFR Rate (as defined in the Credit Agreement) applicable for an interest period of one month plus 1.00 % plus (x) 2.25 % margin for the Term Loan or (y) 2.00 % margin for the Revolving Credit Facility;

SOFR plus a credit spread adjustment equal to 0.10 % for one-month SOFR, 0.15 % for up to three-month SOFR and 0.25 % for up to six-month SOFR, subject to a floor of 0.50 %, plus (x) 3.25 % margin for the Term Loan or (y) 3.00 % margin for the Revolving Credit Facility.

The Simply Good Foods Company is not a borrower under the Credit Agreement and has not provided a guarantee of the Credit Agreement.

3 unchanged sentences

All guarantors other than Quest Nutrition, LLC are holding companies with no assets other than their investments in their respective subsidiaries.

On March 16, 2018 (the “Amendment Date”), the Company entered into an amendment (the “Repricing Amendment”) to the Credit Agreement.

As a result of the Repricing Amendment, the interest rate on the Term Loan was reduced and, as of the Amendment Date, such loans had an interest rate equal to, at the Company’s option, either LIBOR plus an applicable margin of 3.50 %, or a base rate plus an applicable margin of 2.50 %.

The Repricing Amendment did not change the interest rate on the Revolving Credit Facility.

The Revolving Credit Facility continued to bear interest based upon the Company’s consolidated net leverage ratio as of the last financial statements delivered to the administrative agent.

No additional debt was incurred or any proceeds received by the Company in connection with the Repricing Amendment.

The incremental fees paid to the administrative agent are reflected as additional debt discount and are amortized over the terms of the long-term financing agreements using the effective-interest method.

The Term Facility together with the incremental borrowing make up the Initial Term Loans (as defined in the Incremental Facility Amendment) and as of the Amendment No.

2 Effective Date (as defined in the Incremental Facility Amendment), the Initial Term Loans bear interest at a rate equal to, at the Company’s option, either LIBOR plus an applicable margin of 3.75 %, or a base rate plus an applicable margin of 2.75 %.

The Incremental Facility Amendment was executed to partially finance the acquisition of Quest Nutrition, LLC on November 7, 2019.

No amounts under the Term Facility were repaid as a result of the execution of the Incremental Facility Amendment.

Effective as of December 16, 2021, the Company entered into a third amendment (the “Extension Amendment”) to the Credit Agreement.

The Extension Amendment provides for an extension of the stated maturity date of the Revolving Commitments and Revolving Loans (each as defined in the Credit Agreement) from July 7, 2022 to the earlier of (i) 91 days prior to the maturity date of the Initial Term Loans on July 7, 2024 and (ii) December 16, 2026.

The Credit Agreement contains certain financial and other covenants that limit the Company’s ability to, among other things, incur and/or undertake asset sales and other dispositions, liens, indebtedness, certain acquisitions and investments, consolidations, mergers, reorganizations and other fundamental changes, payment of dividends and other distributions to equity and warrant holders, and prepayments of material subordinated debt, in each case, subject to customary exceptions materially consistent with credit facilities of such type and size.

1 unchanged sentence

Any failure to comply with the restrictions of the credit facilities may result in an event of default.

The Company was in compliance with all financial covenants as of November 27, 2021 and August 28, 2021, respectively.

The Company was in compliance with all financial covenants as of February 26, 2022 and August 28, 2021, respectively.

Long-term debt consists of the following:

(In thousands) November 27, 2021 August 28, 2021

Term Facility (effective rate of 4.8% at November 27, 2021)

(In thousands) February 26, 2022 August 28, 2021

Term Facility (effective rate of 3.8% at February 26, 2022)

$ 431,500 $ 456,500

Finance lease liabilities (effective rate of 5.6% at November 27, 2021)

Finance lease liabilities (effective rate of 5.6% at February 26, 2022)

Deferred financing fees 4,847 5,636

2 unchanged sentences

Long-term debt, net of deferred financing fees $ 426,916 $ 451,269

The Company is no t required to make principal payments on the Term Facility over the twelve months following the period ended November 27, 2021.

The Company is no t required to make principal payments on the Term Facility over the twelve months following the period ended February 26, 2022.

The outstanding balance of the Term Facility is due upon its maturity in July 2024.

As of November 27, 2021, the Company had letters of credit in the amount of $ 3.5 million outstanding.

As of February 26, 2022, the Company had letters of credit in the amount of $ 3.5 million outstanding.

These letters of credit offset against the $ 75.0 million availability of the Revolving Credit Facility and exist to support three of the Company’s leased buildings and insurance programs relating to workers’ compensation.

No amounts were drawn against these letters of credit at November 27, 2021.

No amounts were drawn against these letters of credit at February 26, 2022.

The Company utilizes market approaches to estimate the fair value of certain outstanding borrowings by discounting anticipated future cash flows derived from the contractual terms of the obligations and observable market interest and foreign exchange rates.

The Company carries debt at historical cost and discloses fair value.

As of November 27, 2021 and August 28, 2021, the book value of the Company’s debt approximated fair value.

As of February 26, 2022 and August 28, 2021, the book value of the Company’s debt approximated fair value.

The estimated fair value of the Term Loan is valued based on observable inputs and classified as Level 2 in the fair value hierarchy.

7 unchanged sentences

Level 3 Measurements

The Company has outstanding liability-classified Private Warrants that allow holders to purchase 6,700,000 shares of the Company’s common stock.

Such Private Warrants are held by Conyers Park Sponsor, LLC, a related party.

The Company utilizes the Black-Scholes model to estimate the fair value of the Private Warrants at each reporting date.

As of August 28, 2021, the Company had outstanding liability-classified Private Warrants that allowed holders to purchase 6,700,000 shares of the Company’s common stock.

Such Private Warrants were held by Conyers Park Sponsor, LLC (“Conyers Park”), a related party.

On January 7, 2022, Conyers Park elected to exercise the Private Warrants on a cashless basis, resulting in a net issuance of 4,830,761 shares of the Company’s common stock.

As a result of Conyers Park’s election to exercise the Private Warrants, there were no outstanding liability-classified Private Warrants as of February 26, 2022.

Refer to Note 10, Stockholders’ Equity, for additional details regarding the cashless exercise of the Private Warrants.

The Company utilized the Black-Scholes model to estimate the fair value of the Private Warrants at each reporting date.

The application of the Black-Scholes model utilizes significant assumptions, including volatility.

2 unchanged sentences

As a result of the unobservable inputs that were used to determine the expected volatility of the Private Warrants, the fair value measurement of these warrants reflects a Level 3 measurement within the fair value measurement hierarchy.

There were 6,700,000 Private Warrants outstanding as of November 27, 2021 and November 28, 2020.

The table below summarizes the inputs used to calculate the fair value of the warrant liability at each of the following reporting dates:

November 27, 2021 November 28, 2020

There were no Private Warrants outstanding as of February 26, 2022.

As of August 28, 2021, the Company had 6,700,000 Private Warrants outstanding with a fair value price per Private Warrant of $ 23.86 , resulting in a $ 159.8 million total warrant liability.

The table below summarizes the inputs used to calculate the fair value of the warrant liability at August 28,2021:

August 28, 2021

Exercise Price $ 11.50

5 unchanged sentences

Per Share Value of Warrants $ 23.86

The periodic remeasurement of the warrant liability is reflected in (Loss) gain in fair value change of warrant liability within the Condensed Consolidated Statements of Operations and Comprehensive Income.

The adjustments for the thirteen weeks ended November 27, 2021 and November 28, 2020 were a loss of $ 17.3 million and a gain of $ 20.5 million, respectively.

The adjustments resulted in a total warrant liability at November 27, 2021 and November 28, 2020 of $ 177.2 million and $ 73.2 million, respectively.

The periodic remeasurement of the warrant liability has been reflected in Loss in fair value change of warrant liability within the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

The adjustments for the thirteen and twenty-six weeks ended February 26, 2022 were a loss of $ 12.7 million and $ 30.1 million, respectively.

The adjustments for the thirteen and twenty-six weeks ended February 27, 2021 were a loss of $ 45.3 million and $ 24.9 million, respectively.

The tax expense and the effective tax rate resulting from operations were as follows:

Thirteen Weeks Ended

(In thousands) November 27, 2021 November 28, 2020

Twenty-Six Weeks Ended

(In thousands) February 26, 2022 February 27, 2021

Income before income taxes $ 62,685 $ 32,426

1 unchanged sentence

Effective tax rate 36.8 % 48.4 %

The effective tax rate for the thirteen weeks ended November 27, 2021 was 21.4 % greater than the effective tax rate for the thirteen weeks ended November 28, 2020, which was primarily driven by the non-cash change in the fair value of the warrant liability and other permanent differences.

The effective tax rate for the twenty-six weeks ended February 26, 2022 was 11.6 % less than the effective tax rate for the twenty-six weeks ended February 27, 2021, which was primarily driven by the non-cash change in the fair value of the warrant liability and other permanent differences.

The components of lease expense were as follows:

Thirteen Weeks Ended

(In thousands) Statements of Operations Caption November 27, 2021 November 28, 2020

Thirteen Weeks Ended Twenty-Six Weeks Ended

(In thousands) Statements of Operations Caption February 26, 2022 February 27, 2021 February 26, 2022 February 27, 2021

Operating lease cost:

Lease cost Cost of goods sold and General and administrative $ 2,255 $ 1,498

Lease cost Cost of goods sold and

General and administrative $ 2,273 $ 1,496 $ 4,528 $ 2,994

Variable lease cost (1)

Cost of goods sold and General and administrative 653 398

Cost of goods sold and

General and administrative 860 378 1,513 776

Total operating lease cost 3,133 1,874 6,041 3,770

5 unchanged sentences

(1) Variable lease cost primarily consists of common area maintenance, such as cleaning and repairs.

In conjunction with the Company’s restructuring activities as discussed in Note 13, Restructuring and Related Charges, the Company recorded an immaterial gain on lease termination related to its lease in the Netherlands in the thirteen weeks ended November 27, 2021 and a $ 0.4 million impairment charge related to its operating lease right-of-use asset for its lease in Toronto, Ontario in the thirteen weeks ended November 28, 2020.

The effect of these restructuring activities has been included within General and administrative on the Condensed Consolidated Statements of Operations and Comprehensive Income.

In conjunction with the Company’s restructuring activities as discussed in Note 13, Restructuring and Related Charges, the Company recorded an immaterial gain on lease termination related to its lease in the Netherlands in the twenty-six weeks ended February 26, 2022 and a $ 0.5 million impairment charge, net of the gain on lease termination, related to its leases in Toronto, Ontario and the Netherlands in the twenty-six weeks ended February 27, 2021.

The effect of these restructuring activities has been included within General and administrative on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Refer to Note 13, Restructuring and Related Charges, for additional information regarding restructuring activities.

The right-of-use assets and corresponding liabilities related to both operating and finance leases are as follows:

(In thousands) Balance Sheets Caption November 27, 2021 August 28, 2021

(In thousands) Balance Sheets Caption February 26, 2022 August 28, 2021

Operating lease right-of-use assets Other long-term assets $ 48,465 $ 46,197

6 unchanged sentences

Total lease liabilities $ 52,384 $ 49,370

Future maturities of lease liabilities as of November 27, 2021 were as follows:

Future maturities of lease liabilities as of February 26, 2022 were as follows:

(In thousands) Operating Leases Finance Leases

7 unchanged sentences

Present value of lease liabilities $ 51,834 $ 550

As of February 26, 2022, the Company had entered into a lease with estimated total minimum future lease payments of $ 1.6 million over a 7.5 -year minimum lease term that had not yet commenced, and as a result it is not recorded on the Condensed Consolidated Balance Sheets.

The Company expects the lease to commence in fiscal year 2022, and the Company has the option to renew the lease for an additional 5.0 years after the minimum lease term.

The weighted-average remaining lease terms and weighted-average discount rates for operating and finance leases were as follows:

November 27, 2021 August 28, 2021

February 26, 2022 August 28, 2021

Weighted-average remaining lease term (in years)

5 unchanged sentences

Supplemental and other information related to leases was as follows:

Thirteen Weeks Ended

(In thousands) November 27, 2021 November 28, 2020

Twenty-Six Weeks Ended

(In thousands) February 26, 2022 February 27, 2021

Cash paid for amounts included in the measurement of lease liabilities

6 unchanged sentences

The Company is not presently a party to any litigation that it believes to be material, and the Company is not aware of any pending or threatened litigation against it that its management believes could have a material adverse effect on its business, operating results, financial condition or cash flows.

As of November 27, 2021 and August 28, 2021, the Company had $ 0.7 million reserved for potential settlements.

As of February 26, 2022 and August 28, 2021, the Company had $ 0.7 million reserved for potential settlements.

The Company has entered into endorsement contracts with certain celebrity figures and social media influencers to promote and endorse the Atkins and Quest brands and product lines.

These contracts contain endorsement fees, which are expensed ratably over the life of the contract, and performance fees, that are recognized at the time of achievement.

Based on the terms of the contracts in place and achievement of performance conditions as of November 27, 2021, the Company will be required to make payments of $ 2.1 million over the next year.

Based on the terms of the contracts in place and achievement of performance conditions as of February 26, 2022, the Company will be required to make payments of $ 1.3 million over the next year.

Stockholders’ Equity

Warrants to Purchase Common Stock

As of November 27, 2021, the Company has outstanding liability-classified Private Warrants that allow holders to purchase 6,700,000 shares of the Company’s common stock.

Such Private Warrants are held by Conyers Park Sponsor, LLC, a related party.

Each whole warrant entitles the holder to purchase one share of the Company’s common stock at a price of $ 11.50 per share.

The warrants expire on July 7, 2022 or earlier upon redemption or liquidation, as applicable.

As discussed in Note 6, Fair Value of Financial Instruments, the liability-classified warrants are remeasured on a recurring basis, primarily based on observable market data while the related theoretical private warrant volatility assumption within the Black-Scholes model represents a Level 3 measurement within the fair value measurement hierarchy.

As of August 28, 2021, the Company had outstanding liability-classified Private Warrants that allowed holders to purchase 6,700,000 shares of the Company’s common stock.

Such Private Warrants were held by Conyers Park, a related party.

Each whole warrant entitled the holder to purchase one share of the Company’s common stock at a price of $ 11.50 per share.

On January 7, 2022, Conyers Park elected to exercise the Private Warrants on a cashless basis, resulting in a net issuance of 4,830,761 shares of the Company’s common stock.

As a result of the cashless exercise on January 7, 2022, there were no outstanding liability-classified Private Warrants as of February 26, 2022.

As discussed in Note 6, Fair Value of Financial Instruments, the liability-classified warrants were remeasured on a recurring basis, primarily based on observable market data while the related theoretical private warrant volatility assumption within the Black-Scholes model represents a Level 3 measurement within the fair value measurement hierarchy.

The periodic fair value remeasurements of the warrant liability, including the cashless exercise and the settlement of the warrant liability, have been reflected in Loss in fair value change of warrant liability within the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Stock Repurchase Program

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The stock repurchase program may be suspended or discontinued at any time by the Company and does not have an expiration date.

During the thirteen weeks ended November 27, 2021 and November 28, 2020, the Company did not repurchase any shares of common stock.

As of November 27, 2021, approximately $ 47.9 million remained available under the stock repurchase program.

During the thirteen and twenty-six weeks ended February 26, 2022, the Company repurchased 571,521 shares of common stock at an average share price of $ 35.68 per share.

The Company did not repurchase any shares of common stock during the twenty-six weeks ended February 27, 2021.

As of February 26, 2022, approximately $ 27.5 million remained available under the stock repurchase program.

Accumulated Other Comprehensive Loss

During the thirteen and twenty-six weeks ended February 26, 2022, the Company recognized a foreign currency translation gain of $1.1 million related to the liquidation of a foreign subsidiary.

The gain is reflected as a component of Other income (expense) in Gain on foreign currency transactions within the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Earnings Per Share

Basic earnings or loss per share is based on the weighted average number of common shares issued and outstanding.

In computing diluted earnings per share, basic earnings per share is adjusted for the assumed issuance of all potentially dilutive securities.

In periods in which the Company has a net loss, diluted earnings per share is based on the weighted average number of common shares issued and outstanding as the effect of including common stock equivalents outstanding would be anti-dilutive.

As of November 27, 2021, the Company has outstanding liability-classified Private Warrants to purchase 6,700,000 shares of the Company’s common stock.

During periods when the effect is dilutive, the Company assumes share settlement of the instruments as of the beginning of the reporting period and adjusts the numerator to remove the change in fair value of the warrant liability and adjusts the denominator to include the dilutive shares, calculated using the treasury stock method.

During periods when the impact is anti-dilutive, the share settlement is excluded.

The following table reconciles the numerators and denominators used in the computations of both basic and diluted earnings per share:

Thirteen Weeks Ended

(In thousands, except per share data) November 27, 2021 November 28, 2020

Basic earnings per share computation:

Net income available to common stockholders $ 21,152 $ 42,953

In computing diluted earnings (loss) per share, basic earnings (loss) per share is adjusted for the assumed issuance of all potentially dilutive securities, including the Company’s employee stock options, non-vested stock units, and Private Warrants for the periods during which they were outstanding.

During periods when the effect of the outstanding Private Warrants was dilutive, the Company assumed share settlement of the instruments as of the beginning of the reporting period and adjusted the numerator to remove the change in fair value of the warrant liability and adjusted the denominator to include the dilutive shares, calculated using the treasury stock method.

During periods when the effect of the outstanding Private Warrants was anti-dilutive, the share settlement is excluded.

In periods in which the Company has a net loss, diluted earnings (loss) per share is based on the weighted average number of common shares issued and outstanding as the effect of including common stock equivalents outstanding would be anti-dilutive.

The following tables reconcile the numerators and denominators used in the computations of both basic and diluted earnings (loss) per share:

Thirteen Weeks Ended Twenty-Six Weeks Ended

(In thousands, except per share data) February 26, 2022 February 27, 2021 February 26, 2022 February 27, 2021

Basic earnings (loss) per share computation:

Net income (loss) available to common stockholders $ 18,461 $ ( 26,214 ) $ 39,613 $ 16,739

Weighted average common shares outstanding - basic 98,599,271 95,734,591 97,228,058 95,712,057

Basic earnings per share from net income $ 0.22 $ 0.45

Diluted earnings per share computation:

Net income available for common stockholders $ 21,152 $ 42,953

Gain in fair value change of warrant liability — ( 20,453 )

Numerator for diluted earnings per share $ 21,152 $ 22,500

Basic earnings (loss) per share from net income (loss) $ 0.19 $ ( 0.27 ) $ 0.41 $ 0.17

Diluted earnings (loss) per share computation:

Net income (loss) available for common stockholders $ 18,461 $ ( 26,214 ) $ 39,613 $ 16,739

Numerator for diluted earnings (loss) per share $ 18,461 $ ( 26,214 ) $ 39,613 $ 16,739

Weighted average common shares outstanding - basic 98,599,271 95,734,591 97,228,058 95,712,057

Private Warrants — 3,216,252

Employee stock options 1,640,199 — 1,645,793 1,056,707

Non-vested shares 352,151 109,381

Non-vested stock units 175,300 — 279,110 228,248

Weighted average common shares - diluted 100,414,770 95,734,591 99,152,961 96,997,012

Diluted earnings per share from net income $ 0.22 $ 0.23

The diluted earnings per share calculation for the thirteen weeks ended November 27, 2021 excluded 4.6 million shares, issuable upon exercise of Private Warrants, that would have been anti-dilutive.

Diluted earnings per share calculations for the thirteen weeks ended November 27, 2021 and November 28, 2020 excluded 0.2 million and 0.7 million shares of common stock issuable upon exercise of stock options, respectively, that would have been anti-dilutive.

An immaterial number of non-vested restricted stock units that would have been anti-dilutive were excluded from diluted earnings per share calculations for the thirteen weeks ended November 27, 2021 and November 28, 2020.

Diluted earnings (loss) per share from net income (loss) $ 0.18 $ ( 0.27 ) $ 0.40 $ 0.17

Diluted earnings per share calculations for the thirteen and twenty-six weeks ended February 26, 2022 excluded 0.9 million shares and 1.5 million shares, issuable upon exercise of Private Warrants, respectively, that would have been anti-dilutive.

The diluted earnings (loss) per share calculations for the thirteen and twenty-six weeks ended February 27, 2021 excluded 3.9 million shares and 3.6 million shares, issuable upon exercise of Private Warrants, respectively, that would have been anti-dilutive.

Diluted earnings per share calculations for the thirteen and twenty-six weeks ended February 26, 2022 excluded 0.3 million shares of common stock issuable upon exercise of stock options that would have been anti-dilutive.

Diluted earnings (loss) per share calculations for the thirteen and twenty-six weeks ended February 27, 2021 excluded 1.4 million shares and 0.6 million shares of common stock issuable upon exercise of stock options, respectively, that would have been anti-dilutive.

Diluted earnings per share calculations for the thirteen and twenty-six weeks ended February 26, 2022 excluded 0.1 million non-vested stock units that would have been anti-dilutive.

Diluted earnings (loss) per share calculations for the thirteen and twenty-six weeks ended February 27, 2021 excluded 0.3 million non-vested stock units and an immaterial number of non-vested stock units, respectively, that would have been anti-dilutive.

Omnibus Incentive Plan

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Stock-based compensation expense is included within General and administrative expense, which is the same financial statement caption where the recipient’s other compensation is reported.

The Company recorded stock-based compensation expense of $ 2.6 million and $ 1.1 million in the thirteen weeks ended November 27, 2021 and November 28, 2020, respectively.

The Company recorded stock-based compensation expense of $ 3.1 million and $ 2.5 million in the thirteen weeks ended February 26, 2022 and February 27, 2021, respectively, and $ 5.7 million and $ 3.6 million in the twenty-six weeks ended February 26, 2022 and February 27, 2021, respectively.

Stock Options

The following table summarizes stock option activity for the thirteen weeks ended November 27, 2021:

The following table summarizes stock option activity for the twenty-six weeks ended February 26, 2022:

Shares underlying options Weighted average

4 unchanged sentences

Forfeited ( 2,300 ) 19.89

Outstanding as of November 27, 2021 3,109,538 $ 17.42 6.73

Vested and expected to vest as of November 27, 2021 3,109,538 $ 17.42 6.73

Exercisable as of November 27, 2021 2,494,944 $ 14.13 6.10

As of November 27, 2021, the Company had $ 6.5 million of total unrecognized compensation cost related to stock option plans that will be recognized over a weighted average period of 2.3 years.

During the thirteen weeks ended November 27, 2021 and November 28, 2020, the Company received $ 0.3 million and $ 0.2 million in cash from stock option exercises, respectively.

Outstanding as of February 26, 2022 3,009,538 $ 17.60 6.52

Vested and expected to vest as of February 26, 2022 3,009,538 $ 17.60 6.52

Exercisable as of February 26, 2022 2,397,145 $ 14.23 5.87

As of February 26, 2022, the Company had $ 5.8 million of total unrecognized compensation cost related to stock options that will be recognized over a weighted average period of 2.0 years.

During the twenty-six weeks ended February 26, 2022 and February 27, 2021, the Company received $ 1.5 million and $ 0.5 million in cash from stock option exercises, respectively.

Restricted Stock Units

The following table summarizes restricted stock unit activity for the thirteen weeks ended November 27, 2021:

The following table summarizes restricted stock unit activity for the twenty-six weeks ended February 26, 2022:

Units Weighted average

4 unchanged sentences

Forfeited ( 14,489 ) 26.02

Non-vested as of November 27, 2021 475,623 $ 29.34

As of November 27, 2021, the Company had $ 12.1 million of total unrecognized compensation cost related to restricted stock units that will be recognized over a weighted average period of 2.0 years.

Non-vested as of February 26, 2022 460,307 $ 29.38

As of February 26, 2022, the Company had $ 10.4 million of total unrecognized compensation cost related to restricted stock units that will be recognized over a weighted average period of 1.8 years.

Performance Stock Units

During the thirteen weeks ended November 27, 2021, the Board of Directors granted performance stock units under the Company’s equity compensation plan.

During the twenty-six weeks ended February 26, 2022, the Board of Directors granted performance stock units under the Company’s equity compensation plan.

Performance stock units vest in a range between 0 % and 200 % based upon certain performance criteria in a three -year period.

Performance stock units were valued using a Monte Carlo simulation.

The following table summarizes performance stock unit activity for the thirteen weeks ended November 27, 2021:

The following table summarizes performance stock unit activity for the twenty-six weeks ended February 26, 2022:

Units Weighted average

4 unchanged sentences

Forfeited ( 7,196 ) 17.76

Non-vested as of November 27, 2021 257,271 $ 32.77

As of November 27, 2021, the Company had $ 5.7 million of total unrecognized compensation cost related to performance stock units that will be recognized over a weighted average period of 1.8 years.

Non-vested as of February 26, 2022 256,425 $ 32.79

As of February 26, 2022, the Company had $ 5.0 million of total unrecognized compensation cost related to performance stock units that will be recognized over a weighted average period of 1.5 years.

Stock Appreciation Rights

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SARs cliff vest three years from the date of grant and must be exercised within ten years .

The following table summarizes SARs activity for the thirteen weeks ended November 27, 2021:

The following table summarizes SARs activity for the twenty-six weeks ended February 26, 2022:

Shares underlying SARs Weighted average

3 unchanged sentences

Forfeited — —

Outstanding as of November 27, 2021 150,000 $ 24.20 7.93

Vested and expected to vest as of November 27, 2021 150,000 $ 24.20 7.93

Exercisable as of November 27, 2021 — $ — 0.00

As of November 27, 2021, the Company had $ 0.1 million of total unrecognized compensation cost related to its SARs that will be recognized over a weighted average period of 0.9 years.

Outstanding as of February 26, 2022 150,000 $ 24.20 7.68

Vested and expected to vest as of February 26, 2022 150,000 $ 24.20 7.68

Exercisable as of February 26, 2022 — $ — 0.00

As of February 26, 2022, the Company had $ 0.1 million of total unrecognized compensation cost related to its SARs that will be recognized over a weighted average period of 0.7 years.

Restructuring and Related Charges

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Restructuring accruals are based upon management estimates at the time and can change depending upon changes in facts and circumstances subsequent to the date the original liability was recorded.

Changes to the restructuring liability during the thirteen weeks ended November 27, 2021 were as follows:

Changes to the restructuring liability during the twenty-six weeks ended February 26, 2022 were as follows:

(In thousands) Termination benefits and severance Other Restructuring liability

2 unchanged sentences

Cash payments ( 903 ) ( 76 ) ( 979 )

Balance as of November 27, 2021 $ 147 $ — $ 147

In addition to the restructuring costs shown above, the Company recorded an immaterial gain on lease termination related to its lease in the Netherlands in the thirteen weeks ended November 27, 2021.

As a result, the Company’s total restructuring and restructuring-related costs incurred in the thirteen weeks ended November 27, 2021 were immaterial.

The Company incurred a total of $ 2.5 million in restructuring and restructuring-related costs in the thirteen weeks ended November 28, 2020.

The effect of these restructuring activities has been included within General and administrative on the Condensed Consolidated Statements of Operations and Comprehensive Income.

Balance as of February 26, 2022 $ — $ — $ —

In addition to the restructuring costs shown above, the Company recorded an immaterial gain on lease termination related to its lease in the Netherlands in the twenty-six weeks ended February 26, 2022.

As a result, the Company’s total restructuring and restructuring-related costs incurred in the thirteen and twenty-six weeks ended February 26, 2022 were $ 0.1 million.

The Company incurred a total of $ 1.3 million and $ 3.8 million in restructuring and restructuring-related costs in the thirteen and twenty-six weeks ended February 27, 2021, respectively.

The effect of these restructuring activities has been included within General and administrative on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Since the restructuring activities were announced in May 2020, the Company has incurred aggregate restructuring and restructuring-related costs of $ 9.9 million.

Overall, the Company expects to incur a total of approximately $ 10.1 million in restructuring and restructuring-related costs, which are to be paid through the second quarter of fiscal year 2022.

Overall, the Company expects to incur a total of approximately $ 10.1 million in restructuring and restructuring-related costs, which are to be paid through the third quarter of fiscal year 2022.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements