What changed in this filing

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Item 1. Business

2022-10-21 compared with 2021-10-26 · 170 added, 144 removed, 237 unchanged (57% of the section changed)

The Simply Good Foods Company is a consumer packaged food and beverage company that aims to lead the nutritious snacking movement with trusted brands that offer a variety of convenient, innovative, great-tasting, better-for-you snacks and meal replacements.

The product portfolio we develop, market and sell consists primarily of protein bars, ready-to-drink (“RTD”) shakes, sweet and salty snacks and confectionery products marketed under the Atkins®, Atkins Endulge®, and Quest® brand names.

Simply Good Foods is poised to expand its wellness platform through innovation and organic growth along with acquisition opportunities in the nutritional snacking space.

The Company’s nutritious snacking platform consists of brands that specialize in providing products for consumers that follow certain nutritional philosophies and health-and-wellness trends:

Atkins® for those following a low-carb lifestyle and Quest® for consumers seeking a variety of protein-rich foods and beverages that also limit sugars and simple carbs.

Atkins for those following a low-carb lifestyle or seeking to lose weight and Quest for consumers seeking a variety of protein-rich foods and beverages that also limit sugars and simple carbs.

We distribute our products in major retail channels, primarily in North America, including grocery, club, and mass merchandise, as well as through e-commerce, convenience, specialty, and other channels.

Our portfolio of nutritious snacking brands gives us a strong platform with which to introduce new products, expand distribution, and attract new consumers to our products.

We believe snacking occasions have been on the rise in recent years as consumers desire more convenient, healthy and delicious foods, snacks, and meal replacements.

We believe our emphasis on product formats such as our protein bars, cookies, chips, and RTD shakes positions us to fill important needs for consumers.

We believe snacking occasions have been on the rise in recent years as consumers continue to desire more convenient, healthy and delicious foods, snacks, and meal replacements.

We believe our emphasis on product formats such as our protein bars, cookies, chips and salty snacks, and RTD shakes positions us to fill important needs for consumers.

We believe a number of existing and emerging consumer trends within the U.S.

food and beverage industry will continue to both drive the growth of the nutritional snacking category and increase the demand for our product offerings.

Some of these trends include increased consumption of smaller, more frequent meals throughout the day, consumers’ strong preference for convenient, “better-for-you” snacks, consumers’ greater focus on health and wellness, and consumers’ movement toward limiting carbohydrate and sugar consumption, as well as the trend of consumers seeking to add convenient sources of protein and fiber to their diets.

With our Atkins brand, we strive to offer a compelling line of protein bars, RTD shakes, cookies, and confections, and with our Quest brand, we strive to offer an attractive line up of protein bars, cookies, pizza, protein chips, RTD shakes, and confections, which target these existing and emerging consumer trends.

Our sales, marketing, and research and development capabilities enable us to distribute products to a national customer base across a spectrum of retail channels, including the mass merchandise, grocery, and drug channels, club stores, e-commerce, and small format retail such as convenience stores and gas stations.

Some of these trends include increased consumption of smaller, more frequent meals throughout the day, consumers’ strong preference for convenient, “better-for-you” snacks, consumers’ greater focus on health and wellness, consumers’ movement toward limiting carbohydrate and sugar consumption, and the trend of consumers seeking to add convenient sources of protein and fiber to their diets.

With our Atkins brand, we strive to offer a compelling line of protein bars, RTD shakes, cookies, protein chips and salty snacks, and confections, and with our Quest brand, we strive to offer an attractive line up of protein bars, cookies, protein chips and salty snacks, RTD shakes, and confections, which target these existing and emerging consumer trends.

Our sales, marketing, and research and development capabilities enable us to distribute products to a national customer base across a spectrum of retail channels, including the mass merchandise, grocery, drug, club stores, e-commerce, and small format retail such as convenience stores and gas stations.

Simply Good Foods was formed in Delaware on March 30, 2017, to consummate the Business Combination, which occurred on July 7, 2017.

As part of our strategy to become an industry leading snacking platform, in November 2019, we acquired Quest Nutrition, LLC.

We refer to this transaction as the “Quest Acquisition.”

In addition to pursuing attractive run-rate cost synergies over time by leveraging efficiencies of scale with our legacy Atkins business, we completed the Quest Acquisition to realize several other potential benefits.

Quest’s products compete in many attractive, fast growing sub-segments within the nutritional snacking category and we expect Quest’s research and development insights and capabilities to benefit our broader business.

Quest also has an extremely loyal following and strong appeal among consumers ages 18-35, which complements Atkins’ strength among consumers ages 35+.

The Quest Acquisition allows us to benefit from Quest’s existing relationships and effectiveness within certain channels of trade, such as e-commerce and the small format channel, and leverage Quest’s social media-based marketing capabilities.

We have benefited from utilizing certain of Quest’s systems, such as its enterprise resource planning platform, and associated reporting tools.

In addition to pursuing attractive run-rate cost synergies over time by leveraging efficiencies of scale with our legacy Atkins business, we completed the Quest Acquisition with the goal of realizing several other potential benefits.

Quest’s products compete in many attractive, fast growing sub-segments within the nutritional snacking category.

In addition, Quest’s research and development insights and capabilities have benefited our broader business.

Quest has an extremely loyal following and strong appeal among consumers ages 18-35, which complements Atkins’ strength among consumers ages 35+.

The Quest Acquisition also allowed us to benefit from Quest’s existing relationships and effectiveness within certain channels of trade, such as e-commerce and the small format channel, and leverage Quest’s social media-based marketing capabilities.

Since completion of the Quest Acquisition, we have benefited from utilizing certain of Quest’s systems, such as its enterprise resource planning platform, and associated reporting tools.

Our principal executive offices are located at 1225 17 th Street, Suite 1000, Denver, Colorado, 80202.

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We maintain a web site at www.thesimplygoodfoodscompany.com .

Effects of COVID-19

Our consolidated results of operations for the fiscal year ended August 28, 2021 continued to be affected by the significant changes in consumer shopping and consumption behavior patterns due to COVID-19 which had begun during our third quarter in fiscal 2020.

Our business did improve during the course of fiscal year 2021, driven by increasing consumer mobility and improving shopper traffic in brick and mortar retailers versus the prior periods that were pressured by COVID-19 movement restrictions.

We believe there is a high correlation of consumer mobility to the consumption of our products.

As shopper traffic within brick and mortar retailers improves, particularly in the mass and convenience store channels, and as consumers spend more time away from home, our business, particularly bars, performs well.

There is still uncertainty related to the sustainability of improving consumer mobility and shopping trips observed in

the second half of fiscal year 2021.

While our Quest brand has outperformed its portion of the nutritious snacking segment, the performance of our Atkins brand, which is part of the weight management portion of the market, has improved at a slower rate.

However, the Atkins brand performance for the fifty-two weeks ended August 28, 2021 has improved during the course of fiscal year 2021, primarily due to increasing consumer mobility and improving shopper traffic in brick and mortar retailers.

During fiscal year 2022, we expect our business performance will continue to be correlated primarily to the level of consumer mobility, which includes the rate at which consumers return to working outside the home.

Beginning in the third quarter of 2020, we actively engaged with the various elements of our value chain, including our retail customers, contract manufacturers, and logistics and transportation providers, to meet demand for our products and to remain informed of any challenges within our value chain.

In the fourth quarter of 2020 and continuing into fiscal year 2021, consumer consumption habits became steadier, however inventory levels remain variable.

Based on information available to us as of the date of this Report, we believe we will be able to deliver our products to meet customer orders on a timely basis, and therefore, we expect our products will continue to be available for purchase to meet consumer meal replacement and snacking needs for the foreseeable future.

We continue to monitor customer and consumer demand along with our logistics capabilities to deliver products to our retail customers on a timely and consistent basis, and intend to adapt our plans as needed to continue to drive our business and meet our obligations during the continuing and evolving COVID-19 situation.

We remain uncertain of the ultimate effect COVID-19 could have on our business notwithstanding the distribution of several U.S.

government approved vaccines and the easing of movement restrictions.

This uncertainty stems from the potential for, among other things, (i) the presence of current mutations of COVID-19 which have resulted in increased rates of reported cases for which currently approved vaccines are not as effective along with the possibility of future mutations occurring for which current approved vaccines are less 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 customer establishments.

Business Trends in Fiscal Year 2022

Throughout fiscal year 2022, our business 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 more severely pressured by COVID-19 mitigation strategies, including movement restrictions and closures of or reduced access to customer establishments.

We expect our business performance during fiscal year 2023 will continue to be affected by the dynamic macroeconomic inflationary environment in the United States and elsewhere, elevated levels of supply chain cost inflation, and the level of consumer mobility, which includes the rate at which consumers return to working outside the home.

Overall consumer spending, particularly in the United States, continued to recover from the effects of the COVID-19 pandemic, which resulted in well documented industry-wide supply chain disruptions across the United States and globally during fiscal year 2022.

As a result, we experienced corresponding unfavorable effects of higher raw material costs, higher freight and logistics costs, and supply chain challenges, including supply chain disruptions resulting from labor shortages and disruptions in ingredients.

We expect to continue to see these cost pressures and supply chain challenges persist into fiscal year 2023.

We have also continued to see contract manufacturer and logistics challenges, largely related to availability of labor, which we believe along with the ingredient shortages discussed above have contributed to lower retail and e-commerce sales of our products due to periodic out-of-stock situations, delayed recognition of sales and higher than historical inventory levels at times.

The improvement in consumer mobility and shopper traffic patterns experienced during fiscal year 2022 has been variable, and there continues to be uncertainty related to the sustainability and longevity of these trends.

The ultimate effect COVID-19, supply chain challenges, cost pressures discussed above, and the overall effects of the current high inflation environment on consumer purchasing patterns could have on our business continues to be not fully known.

Additionally, management is continuing to monitor the conflict in Ukraine, especially regarding the availability and cost of raw materials that are produced in this region and Europe in general.

Management is also monitoring for signs of any expansion of economic or supply chain disruptions or broader supply chain inflationary costs resulting either directly or indirectly from the crisis in Eastern Europe.

Our Strengths

Powerful brands with strong consumer awareness and loyalty .

We are a leader in the fast growing nutritional snacking category, and both the Atkins and Quest brands are leading brands with scale in protein bars, confections, and cookies for both brands, RTD shakes for the Atkins brand, and chips and pizza for the Quest brand.

We are a leader in the fast growing nutritional snacking category, and both the Atkins and Quest brands are leading brands with combined scale in protein bars, protein chips, confections, cookies, and RTD shakes.

Our highly focused snacking portfolio provides us with a leading position within retailers’ nutrition and wellness aisles, resulting in meaningful shelf space.

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Over 100 independent, peer reviewed, clinical studies show the benefits of controlling carbohydrates.

Management believes that this focus is prompting consumers to rebalance their nutritional breakdown away from carbohydrates.

In fact, 73% of consumers are seeking to lower their carbohydrate intake according to Health Focus International.

Management believes this focus is prompting consumers to rebalance their nutritional breakdown away from carbohydrates.

Our brand attributes, “low-carb,” “low-sugar” and “protein-rich” nutrition, are well aligned with consumer mega trends.

In addition, we believe consumers’ eating habits are gradually shifting towards increased convenience, snacking and meal replacement.

We also believe our portfolio of convenient and nutritious products and our ongoing effort to meet consumer demands for “cleaner labels,” which we define as products made with fewer, simpler and more recognizable ingredients, are strategically aligned with these trends.

We also believe our portfolio of convenient and nutritious products and our ongoing effort to meet consumer demands for convenient options to support their individual health, nutrition and lifestyle goals.

Scalable snacking and food platform.

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Our in-house product development experience, combined with our outsourced manufacturing model, allow us to bring new products to market quickly.

We pride ourselves on knowing our consumers and mining insights that lead to new products and ideas.

We pride ourselves on knowing our consumers and gleaning insights that lead to new products and ideas.

We believe we can leverage our strong relationships with our retail customers and distributors, a strong brand building track record, and category management expertise to help new products, brands and brand extensions gain distribution and consumer recognition, allowing us to continue to successfully expand our snacking platform.

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Simply Good Foods has an experienced team of industry veterans with extensive experience across multiple branded consumer products, food and nutrition categories.

For example, our President and Chief Executive Officer, Joseph

Scalzo, has significant experience operating packaged goods businesses, having served in various leadership roles at Dean Foods, WhiteWave Foods, The Gillette Company, The Coca-Cola Company, and The Procter & Gamble Company.

Our management team’s extensive experience is complemented by the significant industry expertise of our directors James Kilts, the former Chief Executive Officer of The Gillette Company and Nabisco, and former President of Kraft USA and Oscar Mayer, and David West, the former Chief Executive Officer of Big Heart Pet Brands and The Hershey Company.

Our management team’s extensive experience is complemented by the significant industry expertise of our directors, including James Kilts, the former Chief Executive Officer of The Gillette Company and Nabisco, and former President of Kraft USA and Oscar Mayer, and David West, the former Chief Executive Officer of Big Heart Pet Brands and The Hershey Company.

Our management team’s deep expertise and proven record of accomplishment in managing brands and operating packaged food businesses is a key driver of our success and positions Simply Good Foods as an attractive vehicle for future long-term growth within the nutritional snacking space.

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and approximately 75% of Quest’s gross sales in the U.S.

were through the mass retailer and grocery distribution channels.

were through the mass retailer, grocery and convenience store distribution channels.

Our management believes there is opportunity for the brands to further penetrate those channels as well as other distribution channels such as convenience and club stores.

In addition, while shoppers have increased e-commerce purchases generally, approximately 9% of Atkins’ gross sales for the fifty-two weeks ended August 28, 2021 were through its e-commerce channel as compared to approximately 24% of Quest’s gross sales for the same period were through its e-commerce channel.

In addition, while shoppers have increased e-commerce purchases generally, approximately 12% of Atkins’ gross sales for the fifty-two weeks ended August 27, 2022, were through its e-commerce channel and approximately 21% of Quest’s gross sales for the same period were through its e-commerce channel.

We intend to leverage our brand recognition to develop further the distribution channels through which we reach consumers, including through the continued expansion of the e-commerce channel.

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We are a leader in social media, with a top-tier presence on Facebook, Instagram, Pinterest, Twitter and YouTube.

We also have a growing network of social influencers, who promote our products in their targeted social media posts.

We also have a growing network of social influencers and content creators, who promote our products in their targeted social media posts.

We believe that social media is a cost-effective way of continuing to attract and retain our consumers.

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For our Atkins brand, we use targeted broadcast and streaming television and print ads with a celebrity-based campaign that attempts to motivate potential programmatic weight loss consumers to try the Atkins approach to healthier eating and weight loss as these Atkins consumers are our most loyal, profitable and frequent purchasers.

For our Quest brand, we have recently launched a national, targeted broadcast ad campaign, and continue to leverage targeted streaming television ads and an extensive network of social media influencers who prompt our Quest brand products through their online posts to motivate new buyers and new product introductions.

For our Quest brand, we launched a national, targeted broadcast ad campaign, and continue to leverage targeted streaming television ads and an extensive network of social media influencers and content creators who prompt our Quest brand products through their online posts to motivate new buyers and new product introductions.

Further develop our brand marketing strategies to reach consumers beyond our core historic buyers.

We intend to continue to make focused changes to our approach to consumer outreach to attract consumers beyond our historic core buyers.

For the Atkins brand, we intend to continue our marketing efforts to attract self-directed low-carbohydrate eaters (those individuals not on a program diet) who buy and consume our Atkins products.

For the Atkins brand, we intend to continue our marketing efforts to attract self-directed low-carbohydrate and health motivated eaters (those individuals not on a program diet) who buy and consume our Atkins products.

For our Quest brand, we intend to continue our marketing efforts to reach consumers who are seeking products that are aligned with their choice to pursue a healthy and active lifestyle.

We also note the Atkins brand has

approximately 93% aided brand awareness with U.S.

We also note the Atkins brand has approximately 91% aided brand awareness with U.S.

consumers and the Quest brand has approximately 68% aided brand awareness with U.S.

Our Vision and Mission

Our vision is to lead the nutritional snacking movement with trusted brands that offer a variety of convenient, innovative, great-tasting, better-for-you snacks and meal replacements.

Our vision is to lead the nutritional snacking movement with trusted brands that offer a variety of convenient, innovative, great-tasting, better-for-you snacks and meal replacements and other product offerings.

Our mission is to empower healthy lives through smart and satisfying nutrition.

Core Atkins Products

Our core Atkins brand products consist of protein bars, RTD shakes, cookies and confections.

Our core Atkins brand products consist of protein bars, RTD shakes, confections, cookies, and chips.

Protein Bars.

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Atkins’ cookies contain approximately 10 grams of protein, 3 grams of net carbs and approximately 1 gram of sugar or less depending on the flavor.

Licensed Frozen Meals.

Atkins signed a license agreement with Bellisio Foods, Inc., or “Bellisio,” to license its frozen meals business.

Bellisio manufactures, distributes, markets, promotes and sells Atkins frozen food products under the Atkins licensed marks.

These products include Atkins branded frozen breakfasts, lunches and dinners.

With a large selection of meal types, including pizzas, breakfast bowls and more, we believe our frozen meals offer a great way to learn the basics of protein-rich, low-carbohydrate and low-sugar eating in a simple, convenient and delicious way.

The scope of the license includes all frozen meals across all retail channels (excluding online), in the U.S., Canada and Mexico.

First launched during fiscal year 2022, Atkins’s protein chips offer an attractive nutrition profile when compared to conventional chip products.

Offered in nacho cheese, ranch, and chipotle BBQ flavors, Atkins’s chips typically contain about 13 grams of protein, about 4 grams of net carbs, and around 7 grams of fat compared to 2 grams of protein, 15 grams of net carbs and 8 grams of fat for a well-known leading conventional brand.

While provided free of charge, we also offer over 1,600 protein-rich, low-carbohydrate and low-sugar recipes designed to help consumers achieve and maintain a healthy lifestyle, while still enjoying delicious food.

Core Quest Products

Our core Quest brand products consist of protein bars, cookies, chips, confections and thin crust pizza.

Our core Quest brand products consist of protein bars, cookies, chips and confections.

Protein Bars.

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Quest’s protein chips, including the tortilla-style chips launched in spring 2018, quickly became a high-selling product offering an attractive nutrition profile when compared to conventional chip products.

Offered in flavors including nacho cheese, ranch, chili lime, BBQ, sour cream & onion, and cheddar & sour cream, Quest’s chips typically contain about 18 grams of protein, about 4 grams of net carbs, and around 6 grams of fat compared to 2 grams of protein, 15 grams of net carbs and 8 grams of fat for a well-known leading conventional brand.

Launched in fiscal year 2021, confections include peanut butter cups and “fudgey” brownie and “gooey” caramel candy bites sold in a variety of packaging.

The peanut butter cups feature a nutrition profile for two cups of 11 grams of protein, 1 gram of net carbs, less than 1 gram of sugar and 4 grams of fiber.

Offered in flavors including nacho cheese, ranch, chili lime, BBQ, loaded taco and spicy sweet chili, Quest’s chips typically contain about 18 grams of protein, about 4 grams of net carbs, and around 6 grams of fat compared to 2 grams of protein, 15 grams of net carbs and 8 grams of fat for a well-known leading conventional brand.

Recently launched confections include full-size and mini peanut butter cups and “fudgey” brownie and “gooey” caramel candy bites sold in a variety of packaging.

The full-size peanut butter cups feature a nutrition profile for two cups of 11 grams of protein, 1 gram of net carbs, less than 1 gram of sugar and 4 grams of fiber.

The mini peanut butter cups feature a nutrition profile per serving of 8 grams of protein, 1 gram of net carbs, less than 1 gram of sugar and 3 grams of fiber.

The candy bites feature a nutrition profile of 5 grams of protein, 1 gram of net carbs, less than 1 gram of sugar, and candy bars feature 4 grams of fiber to 12 grams of protein, 3 grams of net carbs, 1 gram of sugar and 9 grams of fiber.

Launched in summer 2018, Quest’s thin crust frozen pizza offers consumers a pizza experience with an improved nutritional profile versus other leading frozen pizza brands.

Sold in a variety of topping combinations including 4-cheese, uncured pepperoni, and supreme, Quest’s pizzas feature a nutrition profile that generally supplies about 29 grams of protein, 6 grams of net carbs or less, around 3 grams of sugar and about 18 grams of fiber compared to 12 grams of protein, 32 grams of net carbs, 2 grams of sugar and 1 gram of fiber for a well-known leading frozen pizza brand.

Marketing, Advertising and Consumer Outreach

Our marketing efforts are designed to increase consumer awareness of and demand for our products.

We employ a broad mix of marketing, including coupons, in-store product sampling, consumer and trade events, advertising (television, online and print) and recipe and food plans, to target our consumers.

We employ a broad mix of marketing, including coupons, product sampling, consumer and trade events, advertising (television, online and print) and recipe and food plans, to target our consumers.

We also use online resources, including social media sites, to communicate with consumers and build interest in our brands.

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Our trade promotions focus on obtaining retail feature and display support, achieving optimum retail product prices and securing retail shelf space.

We use coupons (freestanding insert newspaper, store register, on-pack and online mail coupons) to help stimulate product trial and repeat purchases by providing consumers with economic incentives.

We use coupons (freestanding insert newspaper, store register, on-pack and online coupons) to help stimulate product trial and repeat purchases by providing consumers with economic incentives.

The mix of these marketing activities varies between the Atkins and Quest brands.

We have devoted portions of our respective brand websites to interactive communities designed to promote consumer dialogue about the nutritional values and benefits of our products and suggestions for their use.

As part of our advocacy on the advantages of a protein-rich, low-carbohydrate, and low-sugar dietary approach, we have devoted portions of our respective brand websites and social media to promote consumer education, engagement, and dialogue about the benefits of our nutritional approaches and how our products can fit within those approaches.

Our sales and marketing team gathers information and feedback from consumers and retailers to enable us to better meet changing consumer needs.

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We take a deliberate approach to new product development, focusing on enhancing existing products, innovating flavor and form varieties, and expanding into adjacent snacking products.

Our innovation model is designed to respond to competitive demands, with a primary focus on enhancing the quality and flavor of our products while simplifying composition and reducing the number of ingredients to meet consumer demands for cleaner labels.

Our innovation model is designed to respond to competitive demands, with a primary focus on enhancing the quality and flavor of our products while simplifying composition and ingredients to meet consumer demands for unique nutrition options.

Our innovation strategy is based on ongoing research into consumers’ healthy lifestyle and nutritional needs.

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We maintain an in-house research and development team as well as market research and consumer insight capabilities.

Through our research and development labs in El Segundo, California and Louisville, Colorado, we control our brands’ innovations and product formulations from the ground up.

Through our research and development labs in El Segundo, California and Broomfield, Colorado, we control our brands’ innovations and product formulations from the ground up.

By developing new products, prototypes and adjacencies in-house, we facilitate our core competencies in product innovation, and enhance our speed to market.

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Management also believes the fragmented snacking category presents an opportunity for consolidation and the opportunity to build, through disciplined acquisitions, a leading platform in the nutritional snacking space.

As a leader in nutritious snacking, management believes we have the unique capability to leverage our operating platform and customer relationships to expand beyond our current brands.

As a leader in nutritious snacking,

management believes we have the unique capability to leverage our operating platform and customer relationships to expand beyond our current brands.

Our experienced management team has deep expertise in brand building to expand the business into additional brands and products in the nutritional snacking segment.

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We aggressively protect our intellectual property rights by relying on a combination of watch services and trademark, copyright, patent, trade dress and trade secret laws, and through the domain name dispute resolution system.

We also own virtually all of the recipes and specifications to our products.

We also own virtually all of the recipes and specifications for our products.

We compete primarily with nutritional snacking brands in large retail and e-commerce environments.

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• brand awareness and loyalty among consumers;

• ingredients;

• low-carbohydrate, low-sugar, protein-rich versus other nutritional approaches;

• convenience;

• product ingredients;

• macronutrient profile of products;

• product claims;

• product taste;

• convenience of products;

• media spending;

• product variety and packaging;

• product variety, packaging and labeling;

• access to retailer shelf space.

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Supply Chain .

The majority of our products are shipped directly to one central warehouse for the Atkins brand and one for the Quest brand, each of which is a leased warehouse managed by the same third-party logistics provider.

We are in the process of combining most of our warehouse operations into a newly constructed larger warehouse facility.

We intend to keep one of our original warehouses for a portion of our distribution needs.

A substantial portion of our inventory is shipped directly to our retailers from these centers by the same third-party logistics provider.

The majority of our products are shipped directly to one central warehouse, which is a leased warehouse managed by a third-party logistics provider.

We also have a separate warehouse for a portion of our distribution needs.

A substantial portion of our inventory is shipped directly to our retailers from this warehouse by the same third-party logistics provider.

Most of our remaining customers pick-up their orders at our distribution centers and make their own arrangements for delivery to their fulfillment network.

For certain customers, RTD shakes are shipped directly from the

contract manufacturer to the customers’ locations.

For certain customers, RTD shakes are shipped directly from the contract manufacturer to the customers’ locations.

We believe our use of demand forecasting and vendor-managed inventory systems enables us to meet shipping demands, ensure timely delivery of orders and offer service levels to our customers.

The principal ingredients to manufacture our products include chocolate and other coatings, dairy, proteins, soy, and nuts.

Our packaging supplies consist of flexible film, cartons, tetra paper, and corrugate.

Our packaging consists of flexible film, cartons, tetra paper, and corrugate.

All of our core ingredients are purchased according to rigorous standards to assure food quality and safety.

These core ingredients are generally available in adequate quantities from several suppliers, and to date, core ingredient supplies have largely not been affected by the supply chain challenges related to the COVID-19 pandemic.

These core ingredients are generally available in adequate quantities from several suppliers, and to date, most core ingredient supplies have largely not been affected by the supply chain challenges related to the COVID-19 pandemic or recent geopolitical events.

We competitively bid with major suppliers to source competitively priced, quality ingredients and packaging that meet our standards.

For certain ingredients such as milk protein concentrate, whey proteins, chocolate coatings, some nuts, soy crisps, and liquid soy, we establish direct purchasing agreements with suppliers, under which our contract manufacturers source ingredients to produce finished products.

We also actively manage the cost of our packaging needs, such as corrugated, film, printed boxes, and tetra cartons.

For certain ingredients we establish direct purchasing agreements with suppliers, under which our contract manufacturers source ingredients to produce finished products.

We also actively manage the cost of most of our packaging supplies, such as corrugate, film, and tetra caps and cartons.

The cost of sourcing our ingredients and packaging has been affected by the

current elevated levels of supply chain cost inflation in the United States and elsewhere.

For more information, see “ – Business Trends in Fiscal Year 2022 ,” above.

Manufacturing.

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In general, we purchase finished products from our contract manufacturers, which includes all packaging and ingredients used, as well as an agreed-upon tolling charge for each item produced.

These finished products are then shipped directly to our distribution centers, or shipped directly from the contract manufacturer to the customer, in the case of RTDs to select customers.

We lease three distribution centers, all in Greenfield, Indiana, referred to collectively as the Distribution Centers, where we store finished goods.

These finished products are then shipped directly to our distribution centers, or shipped directly from the contract manufacturer to the customer.

We lease two distribution centers, both in Greenfield, Indiana, referred to collectively as the Distribution Centers, where we store finished goods.

We utilize over 1.29 million square feet of floor space among our Distribution Centers.

Over time, we expect to exit one of the currently operating Distribution Centers once the new facility is fully operational.

Distribution.

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Sales to our largest retailer, Walmart, represented approximately 31% of consolidated sales in fiscal year 2022, of which approximately 23% is through their mass retail channel and approximately 8% is through their Sam’s club and e-commerce channels.

Sales to our next largest retailer, Amazon, represented approximately 12% of consolidated sales in fiscal year 2021.

Sales to our next two largest retailers, Amazon and Target, represented approximately 13% and 10% of consolidated sales in fiscal year 2022, respectively.

No other customer represents more than 10% of sales.

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We aim to ensure that our consumers may access our brand in the way that best suits their lifestyles by offering online ordering of our products.

We sell our products on Atkins.com , questnutrition.com as well as Amazon.com , which all deliver our products directly to the location designated by the consumer.

We sell our products on Atkins.com , questnutrition.com, Amazon.com and e-commerce platforms of our brick-and-mortar customers, which all deliver our products directly to the location designated by the consumer.

Food Safety and Quality.

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Finally, random samples of finished goods are regularly sent to a third-party laboratory for testing.

In addition, during fiscal year 2022, we obtained ISO 22000 certification for our U.S.

International .

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The website operations of such third parties may be affected by reliance on other third-party hardware and software providers, technology changes, risks related to the failure of computer systems through which these website operations are conducted, telecommunications failures, data security breaches and similar disruptions.

Our operations are organized into two operating segments, Atkins and Quest, which are aggregated into one reporting segment due to similar financial, economic and operating characteristics.

The operating segments are also similar in the following areas:

(a) the nature of the products;

(b) the nature of the production processes;

(c) the methods used to distribute products to customers, (d) the type of customer for the products, and (e) the nature of the regulatory environment.

During the fifty-two weeks ended August 27, 2022, we substantially completed our efforts to fully integrate our operations and organization structure after the Quest Acquisition.

We aligned the nature of our production processes and the methods used to distribute products to customers for the Atkins® and Quest® brands.

We also designed our organizational structure to support entity-wide business functions across brands, products, customers, and geographic regions.

Additionally, our chief operating decision maker reviews operating results and forecasts at the consolidated level.

As a result, we determined our operations are organized into one, consolidated operating segment and reportable segment.

Regulation and Compliance

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Federal Trade Commission (“FTC”), the U.S.

Food and Drug Administration (“FDA”), the United States Department of Agriculture (“USDA”), the U.S.

Food and Drug Administration (“FDA”), the U.S.

Environmental Protection Agency, and the Occupational Safety and Health Administration, in addition to similar state and local agencies.

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• prescribes the format and content of certain information required to appear on food product labels.

We are subject to the Food Safety Modernization Act of 2011, which, among other things, mandates that the FDA adopt preventative controls to be implemented by food facilities in order to minimize or prevent hazards to food safety.

We are subject to the Food Safety Modernization Act, which, among other things, mandates that the FDA adopt preventative controls to be implemented by food facilities in order to minimize or prevent hazards to food safety.

We are subject to numerous other federal, state and local regulations involving such matters as the licensing and registration of manufacturing facilities, enforcement by government health agencies of standards for our products, inspection of our facilities and regulation of our trade practices in connection with the sale of food products.

Additionally, because of the ingredients in our Quest pizza products we are subject to the rules and regulations promulgated by the USDA, including the Federal Meat Inspection Act.

The USDA regulates certain aspects of food safety, quality, and nutritional labeling of most meat, poultry, and egg products.

Environmental Regulations

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We are subject to various labeling requirements with respect to our products at the federal, state and local levels.

At the federal level, the FDA and USDA have authority to review product labeling, and the FTC may review labeling and advertising materials, including online and television advertisements, to determine if advertising materials are misleading.

At the federal level the FDA has authority to review product labeling, and the FTC may review labeling and advertising materials, including online and television advertisements, to determine if advertising materials are misleading.

We are also subject to various state and local consumer protection laws.

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Human Capital Resources

As of August 28, 2021, our workforce consisted of 263 employees who are largely based in an office or in research and development (“R&D”) lab locations.

Of that total, approximately 91% of our employees were located in the United States, and the rest were located in Canada, Europe, Australia and New Zealand.

Of our total employees, 118 employees were engaged in marketing and sales, 76 were engaged in R&D, operations and quality, and 69 were engaged in administration.

Of our total employees, 18 employees were hourly and 245 were salaried.

As of August 27, 2022, our workforce consisted of 260 employees globally who were largely based in an office or in research and development (“R&D”) lab locations.

Of that total, approximately 95% of our employees were in the United States, and the rest were in Canada, Europe, Australia, and New Zealand.

111 employees were engaged in marketing and sales, 81 were engaged in R&D, operations and quality, and 68 were engaged in administration.

Of our United States employees, 20 employees were hourly and 227 were salaried.

No employees were covered by a collective bargaining agreement.

Mission, Vision and Values.

Our vision is to lead the nutritious snacking movement with trusted brands that offer a variety of convenient, innovative, great-tasting, better-for-you snacks and meal replacements.

Our mission is to empower healthy lives through smart and satisfying nutrition.

Our vision is to lead the nutritious snacking movement with trusted brands that offer a variety of convenient, innovative, great-tasting, better-for-you snacks and meal replacements.

Our values, Act with Integrity, Lead with Innovation, Succeed through Interdependence, Be Empowered, and Bring Passion Every Day, are critical to our success in fulfilling our mission and vision.

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We regularly host “Be Empowered” sessions for employees, which are educational classes and networking opportunities that teach our nutrition philosophy and our different business functions.

To develop effective and empowered leaders, we host a series of trainings and informational sessions through our program called the Leadership Playbook.

To develop effective and empowered leaders, we host regular trainings and informational sessions.

In our normal performance review cycle, which took place in early fiscal year 2022, 99% of our employees held career discussions with their managers to identify opportunities for development and career progression.

Our accelerated mentorship program pairs junior talent with executive leadership, which is designed to broaden talent networks, increases exposure to cross-functional problem solving and builds leadership competencies and impact.

Because of these career discussions, the accelerated mentorship program and the talent review process conducted by our senior leadership, during fiscal year 2022, we promoted 11% of our workforce and provided associated compensation increases.

Our Commitment to Diversity, Equity & Inclusion (“DE&I”) .

We recognize the importance of a diverse, equitable and inclusive culture for our employees and its effect on our ability to achieve our mission, so we have made commitments to track and improve our performance in each of these areas.

In July 2021, our Board of Directors formed a Corporate Responsibility & Sustainability committee that has been tasked, among other things, with overseeing human capital resources and DE&I initiatives.

As of August 28, 2021, approximately 53% of our employees globally were women and approximately 35% of U.S.

employees were minorities.

Approximately 17% of our Board of Directors were female, and approximately 8% were minorities.

To improve diversity, equity and inclusion, we committed to interviewing diverse candidates for open corporate leadership positions and require every employee to attend preventing discrimination and harassment training.

In January 2021 we completed a pay equity audit to confirm equity in our pay practices.

We have committed to complete a pay equity audit every year to ensure no inequities arise.

Further, we post every open position or promotional opportunity in the United States that is not confidential and include the job’s pay range to provide pay transparency.

This practice provides every qualified candidate an opportunity to apply while also knowing the range of pay for the role.

Our Board of Directors created its Corporate Responsibility & Sustainability committee that has been tasked with, among other things, overseeing human capital resources and all our DE&I initiatives.

These initiatives include the following, among others:

• We hired a third-party DE&I consultant to survey our employees and provide guidance and best practice inputs to our management and the Corporate Responsibility & Sustainability Committee, as we continue to make progress on our DE&I efforts.

• During fiscal year 2022, we established a Diversity, Equity, Inclusion and Belonging Council consisting of mid-level and senior leaders so our DE&I efforts are informed and led by a cross section of our leaders.

Its mission is to foster a positive, open, and trusted culture of belonging where every person feels empowered to bring their unique selves to the workplace resulting in a competitive advantage through thought-leadership and talent growth that halos beyond our workforce to our partners and community, creating an inclusive ecosystem.

• We complete a pay equity audit every fiscal year to evaluate equity in our pay practices and work to address any issues that may arise.

• We post every open position or promotional opportunity in the United States that is not confidential, and we include the job’s pay range to provide transparency to candidates.

This practice provides every qualified candidate an opportunity to apply with knowledge of the range of pay for the role.

• We are committed to interviewing diverse candidates for open corporate leadership positions.

• Environmental, social and governance (“ESG”) initiatives are included as part of the determination of the discretionary component of our annual short-term incentive program.

• All employees are required to attend preventing discrimination and harassment training.

• We observe Juneteenth as a company-paid holiday every year in the United States as a day of reflection, education, and celebration.

The table below provides information as of August 27, 2022, the end of our fiscal year, about the representation of women and minorities as a percentage of our employees at various levels of management categories used by our Executive Leadership Team to manage our workforce.

This information is also reviewed by our Board of Directors about the representation of women and minorities as a percentage of our employees at various levels of management and our Board of Directors, as of August 27, 2022.

Female and Minority Representation

Female Minority 1

All Employees 55% 32%

All People-leaders 43% 19%

Director-level 49% 15%

VP-level 31% 13%

Executive Leadership Team 23% 8%

Board of Directors 18% 9%

1 Minority representation includes the percent of United States employees who identify as Black or African American, Asian, Hispanic, Native American, or two or more races.

The table below provides information for the period December 1, 2021 through December 15, 2021in our 2021 EEO-1 report.

We have condensed the EEO-1 report to eliminate rows and columns that have no employees in this report or in the previous year’s report total.

This table shows our gender, racial, and ethnic composition by EEO-1 job category as set forth in the Section D Employment Data section of the Consolidated EEO-1 Report that we filed with the U.S.

Equal Employment Opportunity Commission (EEOC) in 2022.

The information is provided for the time period that is consistent with the report’s filing instructions.

Not-Hispanic or Latino

Hispanic or Latino Male Female

Job Categories Male Female White Black or African American Asian American Indian or Alaskan Native Two or More Races White Black or African American Native Hawaiian or Pacific Islander Asian Two or More Races Overall Totals

Executives/Senior Officials & Managers — — 10 — — — — 3 — — — — 13

First/Mid Officials & Managers 1 6 38 2 5 — 3 32 — — 8 — 95

Professionals 7 10 20 3 4 1 1 39 3 — 4 3 95

Technicians 1 1 2 — — — — 2 — — — — 6

Sales Workers 2 — 10 — — — — 5 — — — 1 18

Administrative Support — 8 2 — 1 — — 9 2 — 1 — 23

Total 11 25 82 5 10 1 4 90 5 — 13 4 250

Previous Report Total 14 27 74 4 9 — 7 82 5 1 18 4 245

Employee Culture .

We regularly ask our employees to respond to pulse surveys to gather feedback on topics ranging from organization changes to overall engagement and inclusion.

This allows us to keep track of employee engagement and sentiment over time and use this information to inform our strategy and actions to continue to grow and improve.

We have also committed to summarizing results for each survey and providing responses quickly after surveys close.

In August 2021, management hired a third-party DE&I consultant to provide guidance and best practice inputs to our management and the Corporate Responsibility & Sustainability Committee of the Board of Directors, as we continue to make progress on our DE&I efforts.

This encourages open communication with employees and management, and tracks employee engagement over time.

We use the information we gain from the surveys to inform our strategy and actions as we continue to work towards improving our culture.

We have also committed to summarizing results for each survey and providing responses quickly after the surveys close.

Total Rewards.

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Our compensation philosophy is to pay for performance, and we do so through a mix of base salary, annual short-term incentive and long-term incentive.

We understand that each employee's situation is unique, so we offer benefits that can be shaped and molded by each employee to fit their family's needs.

Our current benefits vary by region, but generally include medical, dental and vision insurance, 401(k) retirement plan, savings accounts, life and disability coverage, and other voluntary benefits.

We also offer time-off benefits including vacation time, flexible vacation for exempt positions, sick leave, and parental leave.

Volunteering and Philanthropy.

For decades, we have had a compelling social purpose – to help ensure all Americans have access to sound nutritional guidance to positively affect overall health outcomes.

This began with the book Dr.

Atkins’ Diet Revolution published in 1972 and continues today with our advocacy for improved dietary guidelines and initiatives to educate consumers and empower them to make the right nutritional choices for themselves and their families.

Further, we do our part to stem food insecurity through volunteering opportunities and company philanthropy, including cash and product donations.

We encourage our employees to volunteer, and as such have organized days of volunteering in the cities where our largest workforces reside.

In Denver, Colorado our team volunteered for the Food Bank of the Rockies, and in El Segundo, California our team volunteered for the Los Angeles Mission.

Also this year, we announced participation in Walmart’s “Fight Hunger.

We understand that each employee's situation is unique, so we offer benefits that can be shaped and molded by each employee to fit their individual or family's needs.

Our current benefits vary by region, but generally include medical, dental and vision insurance, 401(k) retirement plan, savings accounts, life and disability insurance coverage, free mental telehealth support, and other voluntary benefits.

We also offer time-off benefits including vacation time, flexible vacation for exempt positions, sick leave, and paid parental leave.

Employee Safety and Wellbeing Measures.

After over two years of working remotely due to the COVID-19 pandemic, we returned to our offices in the United States on May 31, 2022.

In continuing our focus on keeping our teams safe, we continue to follow local regulations for each of our offices.

We recognize the importance of balance in our employees’ lives to their overall wellbeing, so we offer our employees time off benefits described above to recharge, ten company-paid holidays per year, flexible remote workdays every Monday and Friday, and paid parental leave.

We also had one company-wide mental health day in April 2022 and encouraged employees to take extra time away from work to recharge in late December 2021.

Advancing Health, Nutrition and Wellbeing.

Our mission is to empower healthy lives through smart and satisfying nutrition.

We believe we play an important role in helping to improve nutrition and overall wellness in the United States through scientific research, education, advocacy and community engagement.

Since 2016, we have advocated with various branches of the U.S.

federal government to encourage more inclusive guidance in the U.S.

Department of Agriculture’s and U.S.

Department of Health and Human Services’ Dietary Guidelines for Americans (the “Dietary Guidelines”), which is released every five years.

Our goal is to expand the Dietary Guidelines to offer solutions for more Americans, including the more than half of the U.S.

population suffering from negative metabolic-related conditions such as cardiovascular disease, prediabetes, diabetes and obesity.

We also believe expanding the Dietary Guidelines would help to address health equity in many underserved populations in the United States who have higher rates of metabolic-related diseases.

The advocacy work we have done is aligned with recent guidance issued by major health organizations such as the American Diabetes Association and the American Heart Association, both of which recommend a lower carbohydrate dietary approach as an option for those with diabetes.

Our public policy advocacy includes presenting significant scientific research comprised of several hundred, peer-reviewed clinical studies in numerous meetings with policymakers, congresspeople, and decision-makers in the U.S.

Department of Agriculture and the U.S.

Department of Health and Human Services.

In addition, we have sponsored numerous continuing education courses for registered dieticians and other healthcare professionals, and we are a member of multiple collaborative groups focused on improving the nutritional quality of the U.S.

Through our websites and social media, we also share educational information to explain each brand’s approach to nutrition, teaching consumers how to make smarter food choices and the nutritional qualities of our nutritional approach and our products.

Our Atkins website also offers free of charge information regarding the Atkins protein-rich, low-carbohydrate and low-sugar approach to eating, several tools to assist consumers in pursuing the Atkins approach and over 1,600 recipes designed to help consumers achieve and maintain a healthy lifestyle, while still enjoying delicious food.

In late 2021, we launched The Quest Challenge, a grant program for individuals who are making a difference in their community in support of health and wellness.

In our inaugural year, we provided four separate $20,000 grants.

The Quest Challenge grant was awarded following a competitive process in which applicants expressed their current philanthropic work and what they aim to achieve if they received the grant.

Recipients of this year’s grant have used this money to improve the health and wellbeing of underserved and at-risk children, create safe spaces for children to play or learn a new skill, and encourage physical and artistic activities to build confidence and self-esteem.

We will continue to follow the progress of our past recipients and their effect on their communities.

For the second year, we participated in Walmart’s “Fight Hunger.

Spark Change.” campaign.

For each purchase of participating Simply Good Foods products at Walmart from April 5 – May 3, 2021, we donated the monetary equivalent of at least one meal to Feeding America.

For each purchase of participating Simply Good Foods’ Atkins and Quest products at Walmart from April 18 – May 15, 2022, we donated the monetary equivalent of at least one meal to Feeding America.

Through this program, Simply Good Foods secured at least 500,000 meals for Feeding America.

Employee Safety and Wellbeing Measures.

In response to the COVID-19 pandemic, as of August 28, 2021, we have implemented a number of measures to keep our employees safe:

• All office positions have been encouraged to work from home, and we will not require employees to return to the office until January 2022, at the earliest.

• In our offices and R&D labs where employees are required to physically access special tools or resources to work, we follow local, state and federal guidance by:

◦ Requiring face coverings

◦ Instituting social distancing guidelines

◦ Requiring all employees to complete an online health screening daily

◦ Increasing our deep-cleaning schedule

◦ Making hand sanitizer readily available.

• We limit travel to only business-essential travel.

Further, we also strongly encourage employees to receive a COVID-19 vaccine, so we offered an incentive and lottery once the vaccines were widely available to all adults in the United States.

The portion of our employees who got the vaccine exceeded each of the local and state-level vaccination rates of the general population.

We acknowledge the importance of balance in our employees’ lives to their overall wellbeing, so we offer our employees time off benefits described above to recharge.

We also had two company-wide mental health days and encourage employees to take extra time away from work to recharge late December 2020.

We adopted an employee-friendly parental leave policy in 2020.

To address the fatigue that results from working on a computer from home all day, we implemented “Zoom-free” Wednesday afternoons so employees can step away from their computers to focus on other responsibilities.

When we do return to our offices regularly, it is our current intention that Mondays and Fridays will be flexible remote workdays.

Additionally, we encourage and support our employees to give back to charities they are passionate about, and we match up to $100 of each employee’s donations.

Available Information

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We file our reports with the SEC electronically through the SEC’s Electronic Data Gathering, Analysis and Retrieval (“EDGAR”) system.

The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding companies that file electronically with the SEC through EDGAR.

The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding companies that file electronically with the SEC through EDGAR, which are available free of charge.

The address of this Internet site is www.sec.gov .

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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-K

Item 1. Business