What changed in this filing

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Item 1. Financial Statements

2023-01-05 compared with 2022-06-30 · 120 added, 193 removed, 375 unchanged (45% of the section changed)

1 unchanged sentence

The Simply Good Foods Company and Subsidiaries

Condensed Consolidated Balance Sheets

Consolidated Balance Sheets

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

May 28, 2022 August 28, 2021

November 26, 2022 August 27, 2022

Current assets:

5 unchanged sentences

Other current assets

14,590 20,934

Total current assets

24 unchanged sentences

108,894 105,676

Warrant liability — 159,835

Other long-term liabilities

5 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, 101,315,226 and 95,882,908 shares issued at May 28, 2022 and August 28, 2021, respectively 1,013 959

Treasury stock, 887,976 shares and 98,234 shares at cost at May 28, 2022 and August 28, 2021, respectively ( 30,649 ) ( 2,145 )

Common stock, $0.01 par value, 600,000,000 shares authorized, 101,856,457 and 101,322,834 shares issued at November 26, 2022 and August 27, 2022, respectively 1,019 1,013

Treasury stock, 2,365,100 shares and 1,818,754 shares at cost at November 26, 2022 and August 27, 2022, respectively ( 78,451 ) ( 62,003 )

Additional paid-in-capital

9 unchanged sentences

The Simply Good Foods Company and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income

Consolidated Statements of Operations and Comprehensive Income

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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

May 28, 2022 May 29, 2021 May 28, 2022 May 29, 2021

Thirteen Weeks Ended

November 26, 2022 November 27, 2021

Net sales $ 300,878 $ 281,265

11 unchanged sentences

Loss in fair value change of warrant liability — ( 17,317 )

Gain on legal settlement — 5,000 — 5,000

Gain (loss) on foreign currency transactions 108 ( 353 )

5 unchanged sentences

Other comprehensive income:

Foreign currency translation, net of reclassification adjustments $ ( 72 ) $ 95 $ ( 820 ) $ 293

Foreign currency translation $ ( 222 ) $ ( 40 )

Comprehensive income $ 35,638 $ 21,112

7 unchanged sentences

The Simply Good Foods Company and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Consolidated Statements of Cash Flows

(Unaudited, dollars in thousands)

Thirty-Nine Weeks Ended

May 28, 2022 May 29, 2021

Thirteen Weeks Ended

November 26, 2022 November 27, 2021

Operating activities

4 unchanged sentences

Stock compensation expense 3,313 2,605

Loss in fair value change of warrant liability 30,062 60,714

Change in fair value change of warrant liability — 17,317

Estimated credit losses ( 141 ) 15

2 unchanged sentences

Amortization of operating lease right-of-use asset 1,660 1,643

Loss on operating lease right-of-use asset impairment — 686

Gain on lease termination — ( 30 )

9 unchanged sentences

Other assets and liabilities ( 2,212 ) ( 1,002 )

Net cash provided by operating activities

Net cash provided by (used in) operating activities

8,718 ( 7,329 )

2 unchanged sentences

Issuance of note receivable — ( 1,500 )

Proceeds from sale of business — 5,800

Investments in intangible and other assets ( 87 ) ( 186 )

Net cash (used in) provided by investing activities

Net cash used in investing activities

( 1,238 ) ( 4,377 )

5 unchanged sentences

Principal payments of long-term debt ( 6,500 ) ( 25,000 )

Deferred financing costs ( 544 ) —

Net cash used in financing activities

6 unchanged sentences

$ 54,144 $ 35,447

Thirty-Nine Weeks Ended

May 28, 2022 May 29, 2021

Thirteen Weeks Ended

November 26, 2022 November 27, 2021

Supplemental disclosures of cash flow information

2 unchanged sentences

Cash paid for taxes

$ 43,430 $ 15,282

Non-cash investing and financing transactions

Non-cash proceeds from sale of business $ — $ 3,000

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

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

See accompanying notes to the unaudited condensed consolidated financial statements.

The Simply Good Foods Company and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Stockholders’ Equity

(Unaudited, dollars in thousands, except share data)

5 unchanged sentences

Foreign currency translation adjustments — — — — — — ( 222 ) ( 222 )

Repurchase of common stock — — 546,346 ( 16,448 ) — — — ( 16,448 )

Shares issued upon vesting of restricted stock units and performance stock units 180,342 2 — — ( 2,300 ) — — ( 2,298 )

Exercise of options to purchase common stock 19,804 — — — 274 — — 274

Exercise of options and stock appreciation rights to purchase common stock 353,281 4 — — 4,559 — — 4,563

Balance at November 26, 2022 101,856,457 $ 1,019 2,365,100 $ ( 78,451 ) $ 1,292,720 $ 250,241 $ ( 2,173 ) $ 1,463,356

Net income — — — — — 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

Net income — — — — — 38,834 — 38,834

Stock-based compensation — — — — 2,994 — — 2,994

Foreign currency translation adjustments — — — — — — ( 72 ) ( 72 )

Repurchase of common stock — — 218,221 ( 8,110 ) — — — ( 8,110 )

Shares issued upon vesting of restricted stock units 11,358 — — — ( 247 ) — — ( 247 )

Exercise of options to purchase common stock 232,987 2 — — 2,867 — — 2,869

Balance at May 28, 2022 101,315,226 $ 1,013 887,976 $ ( 30,649 ) $ 1,284,342 $ 184,254 $ ( 1,638 ) $ 1,437,322

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

4 unchanged sentences

Foreign currency translation adjustments — — — — — — ( 40 ) ( 40 )

Shares issued upon vesting of restricted stock units 53,908 — — — ( 201 ) — — ( 201 )

Shares issued upon vesting of restricted stock units and performance stock units 227,729 2 — — ( 3,190 ) — — ( 3,188 )

Exercise of options to purchase common stock 19,804 — — — 274 — — 274

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

Net loss — — — — — ( 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

Net income — — — — — 5,895 — 5,895

Stock-based compensation — — — — 2,172 — — 2,172

Foreign currency translation adjustments — — — — — — 95 95

Shares issued upon vesting of restricted stock units 4,683 — — — ( 68 ) — — ( 68 )

Exercise of options to purchase common stock 14,380 — — — 173 — — 173

Balance at May 29, 2021 95,875,778 $ 959 98,234 $ ( 2,145 ) $ 1,082,617 $ 87,561 $ ( 586 ) $ 1,168,406

See accompanying notes to the unaudited condensed consolidated financial statements.

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Description of Business

The Simply Good Foods Company (“Simply Good Foods” or the “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 the Company develops, markets and sells 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.

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The Company maintains its accounting records on a 52/53-week fiscal year, ending on the last Saturday in August of each year.

The interim condensed consolidated financial statements and related notes of the Company and its subsidiaries are unaudited.

The unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S.

The interim consolidated financial statements and related notes of the Company and its subsidiaries are unaudited.

The unaudited interim consolidated financial statements have been prepared in accordance with U.S.

Generally Accepted Accounting Principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”).

The unaudited interim condensed consolidated financial statements reflect all adjustments and disclosures which are, in the Company’s opinion, necessary for a fair presentation of the results of operations, financial position and cash flows for the indicated periods.

The unaudited interim consolidated financial statements reflect all adjustments and disclosures which are, in the Company’s opinion, necessary for a fair presentation of the results of operations, financial position and cash flows for the indicated periods.

All such adjustments were of a normal and recurring nature unless otherwise disclosed.

The year-end balance sheet data was derived from the audited financial statements and, in accordance with the instructions to Form 10-Q, certain information and footnote disclosures required by GAAP have been condensed or omitted.

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.

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, cost pressures, 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.

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.

Factors contributing to the uncertainty described above, 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 improving consumer purchasing and consumption behavior, and (iv) unforeseen business disruptions or other effects due to current global geopolitical tensions, including relating directly or indirectly to the Ukraine crisis.

The results reported in these unaudited interim 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 27, 2022, included in the Company’s Annual Report on Form 10-K (“Annual Report”) filed with the SEC on October 21, 2022.

The ultimate effect the supply chain challenges, cost pressures, current high inflation environment, and the possible economic recession could have on consumer purchasing patterns and on the Company’s 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 the situation in Eastern Europe for its possible supply chain and consumer consumption effects on the Company’s business.

Summary of Significant Accounting Policies

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Recently Issued Accounting Pronouncements Not Yet Adopted

In March 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden in accounting for reference rate reform on financial reporting.

guidance for a limited period of time to ease the potential burden in accounting for reference rate reform on financial reporting.

The amendments in this ASU are effective for all entities and can be applied to contract modifications due to rate reform and eligible existing and new hedging relationships entered into between March 12, 2020 and December 31, 2022.

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The Company does not anticipate the amendments in this ASU will be material to its consolidated financial statements.

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes, which amends existing guidance related to the accounting for income taxes.

This ASU was intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve the consistent application of GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance.

The Company adopted this ASU as of the first day of fiscal year 2022.

The adoption of this ASU did not have a material effect on the consolidated financial statements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which provided updates for technical corrections, clarifications to guidance, simplifications to wording or structure of guidance, and other minor improvements across various areas of accounting within GAAP.

The Company adopted this ASU as of the first day of fiscal year 2022 on a prospective basis.

The adoption of this ASU did not have a material effect on the consolidated financial statements.

No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material effect on the Company’s consolidated financial statements.

1 unchanged sentence

Revenue from transactions with external customers for each of the Company’s products would be impracticable to disclose and management does not view its business by product line.

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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(In thousands) May 28, 2022 May 29, 2021 May 28, 2022 May 29, 2021

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

Thirteen Weeks Ended

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

North America (1)

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(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.

Charges related to credit loss on accounts receivables from transactions with external customers were $ 0.2 million and $ 0.1 million for the thirteen and thirty-nine weeks ended May 28, 2022, respectively, and were $ 0.6 million and $ 0.7 million for the thirteen and thirty-nine weeks ended May 29, 2021, respectively.

As of May 28, 2022 and August 28, 2021, the allowances for doubtful accounts related to these accounts receivable were $ 1.3 million and $ 1.1 million, respectively.

Charges related to credit loss on accounts receivables from transactions with external customers were $( 0.1 ) million for the thirteen weeks ended November 26, 2022, and were immaterial for the thirteen weeks ended November 27, 2021.

As of November 26, 2022 and August 27, 2022, the allowances for doubtful accounts related to these accounts receivable were $ 1.1 million and $ 1.2 million, respectively.

Additionally, as of November 26, 2022, the Company had an expected credit loss reserve of $ 1.0 million on a $ 3.0 million note receivable related to the Company’s sale of its SimplyProtein® brand and related assets during its fiscal year 2021.

Goodwill and Intangibles

As of May 28, 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 thirty-nine weeks ended May 28, 2022 or since the inception of the Company.

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

As of November 26, 2022 and August 27, 2022, Goodwill in the Consolidated Balance Sheets was $ 543.1 million.

There were no impairment charges related to goodwill during the thirteen weeks ended November 26, 2022 or since the inception of the Company.

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

November 26, 2022

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

6 unchanged sentences

Software and website development costs 3 - 5 years 5,863 4,525 1,338

Intangible assets in progress 3 - 5 years 53 — 53

$ 1,182,916 $ 63,569 $ 1,119,347

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Software and website development costs 3 - 5 years 5,863 4,190 1,673

Intangible assets in progress 3 - 5 years 303 — 303

$ 1,182,863 $ 59,605 $ 1,123,258

Changes in Intangible assets, net during the thirty-nine weeks ended May 28, 2022 were primarily related to recurring amortization expense.

Amortization expense related to intangible assets was $ 4.0 million and $ 3.8 million for the thirteen weeks ended May 28, 2022 and May 29, 2021, respectively, and $ 11.9 million and $ 11.6 million for the thirty-nine weeks ended May 28, 2022 and May 29, 2021, respectively.

There were no impairment charges related to intangible assets during the thirteen and thirty-nine weeks ended May 28, 2022 and May 29, 2021.

Changes in Intangible assets, net during the thirteen weeks ended November 26, 2022 were primarily related to recurring amortization expense.

Amortization expense related to intangible assets was $ 3.9 million and $ 4.0 million for the thirteen weeks ended November 26, 2022 and November 27, 2021, respectively.

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

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

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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.

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

and NCP-ATK Holdings, Inc.

5 unchanged sentences

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”).

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 then-effective maturity date of the Initial Term Loans and (ii) December 16, 2026.

On January 21, 2022, the Company entered into the “2022 Repricing Amendment” to the Credit Agreement.

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

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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 May 28, 2022 and August 28, 2021, respectively.

The Company was in compliance with all financial covenants as of November 26, 2022 and August 27, 2022, respectively.

Long-term debt consists of the following:

(In thousands) May 28, 2022 August 28, 2021

Term Facility (effective rate of 4.7% at May 28, 2022)

(In thousands) November 26, 2022 August 27, 2022

Term Facility (effective rate of 7.7% at November 26, 2022)

$ 400,000 $ 406,500

Finance lease liabilities (effective rate of 5.6% at May 28, 2022)

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

Deferred financing fees 3,089 3,620

2 unchanged sentences

Long-term debt, net of deferred financing fees $ 396,994 $ 403,022

The Company is no t required to make principal payments on the Term Facility over the twelve months following the period ended May 28, 2022.

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

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

As of May 28, 2022, the Company had letters of credit in the amount of $ 3.5 million outstanding.

As of November 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 May 28, 2022.

No amounts were drawn against these letters of credit at November 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 May 28, 2022 and August 28, 2021, the book value of the Company’s debt approximated fair value.

As of November 26, 2022 and August 27, 2022, 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.

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Level 3 Measurements

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 May 28, 2022.

During the thirteen weeks ended November 27, 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, and were exercised on a cashless basis on January 7, 2022 resulting in a net issuance of 4,830,761 shares of the Company’s common stock.

As a result, there were no outstanding liability-classified Private Warrants as of November 26, 2022 and August 27, 2022.

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

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In order to determine the most accurate measure of this volatility, the Company measured expected volatility based on several inputs, including considering a peer group of publicly traded companies, the Company’s implied volatility based on traded options, the implied volatility of comparable warrants, and the implied volatility of any outstanding public warrants during the periods they were outstanding.

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 no Private Warrants outstanding as of May 28, 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

Stock price $ 35.35

Dividend yield — %

Expected term (in years) 0.86

Risk-free interest rate 0.06 %

Expected volatility 21.70 %

Per share value of warrants $ 23.86

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.

The adjustments for the thirty-nine weeks ended May 28, 2022 resulted in a loss of $ 30.1 million, and the adjustments for the thirteen and thirty-nine weeks ended May 29, 2021 were losses of $ 35.8 million and $ 60.7 million, respectively.

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 reflected a Level 3 measurement within the fair value measurement hierarchy.

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

The adjustment for the thirteen weeks ended November 27, 2021 was a loss of $ 17.3 million.

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

Thirty-Nine Weeks Ended

(In thousands) May 28, 2022 May 29, 2021

Thirteen Weeks Ended

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

Income before income taxes $ 45,556 $ 33,975

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Effective tax rate 21.3 % 37.7 %

The effective tax rate for the thirty-nine weeks ended May 28, 2022 was 27.2 % less than the effective tax rate for the thirty-nine weeks ended May 29, 2021, 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 thirteen weeks ended November 26, 2022 was 16.4 % less than the effective tax rate for the thirteen weeks ended November 27, 2021, which was primarily driven by the non-cash change in the fair value of the warrant liability in the prior fiscal period and other permanent differences.

The components of lease expense were as follows:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(In thousands) Statements of Operations Caption May 28, 2022 May 29, 2021 May 28, 2022 May 29, 2021

Thirteen Weeks Ended

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

Operating lease cost:

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(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 thirty-nine weeks ended May 28, 2022 and a $ 0.5 million impairment charge, net of a gain on lease termination, related to its leases in Toronto, Ontario and the Netherlands in the thirty-nine weeks ended May 29, 2021.

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

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 May 28, 2022 August 28, 2021

(In thousands) Balance Sheets Caption November 26, 2022 August 27, 2022

Operating lease right-of-use assets Other long-term assets $ 44,800 $ 46,460

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Total lease liabilities $ 50,040 $ 51,137

Future maturities of lease liabilities as of May 28, 2022 were as follows:

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

(In thousands) Operating Leases Finance Leases

2 unchanged sentences

2024 9,424 145

2024 9,425 145

Thereafter 19,848 —

3 unchanged sentences

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

May 28, 2022 August 28, 2021

November 26, 2022 August 27, 2022

Weighted-average remaining lease term (in years)

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Supplemental and other information related to leases was as follows:

Thirty-Nine Weeks Ended

(In thousands) May 28, 2022 May 29, 2021

Thirteen Weeks Ended

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

Cash paid for amounts included in the measurement of lease liabilities

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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 May 28, 2022, the Company will be required to make payments of $ 0.7 million over the next year.

Based on the terms of the contracts in place and achievement of performance conditions as of November 26, 2022, the Company will be required to make payments of $ 3.4 million over the next year.

Stockholders’ Equity

Warrants to Purchase Common Stock

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 May 28, 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.

Stock Repurchase Program

The Company adopted a $ 50.0 million stock repurchase program on November 13, 2018.

On April 13, 2022, the Company announced that its Board of Directors had approved the addition of $ 50.0 million to its stock repurchase program, resulting in authorized stock repurchases of up to an aggregate of $ 100.0 million.

On April 13, 2022, and October 21, 2022, the Company announced that its Board of Directors had approved the addition of $ 50.0 million and $ 50.0 million, respectively, to its stock repurchase program, resulting in authorized stock repurchases of up to an aggregate of $ 150.0 million.

Under the stock repurchase program, the Company may repurchase shares from time to time in the open market or in privately negotiated transactions.

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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 May 28, 2022, the Company repurchased 218,221 shares of common stock at an average share price of $ 37.16 per share.

During the thirty-nine weeks ended May 28, 2022, the Company repurchased 789,742 shares of common stock at an average share price of $ 36.09 per share.

The Company did not repurchase any shares of common stock during the thirty-nine weeks ended May 29, 2021.

As of May 28, 2022, approximately $ 69.3 million remained available under the stock repurchase program.

Accumulated Other Comprehensive Loss

During the thirty-nine weeks ended May 28, 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 (loss) on foreign currency transactions within the Condensed Consolidated Statements of Operations and Comprehensive Income.

During the thirteen weeks ended November 26, 2022, the Company repurchased 546,346 shares of common stock at an average share price of $ 30.11 per share.

The Company did not repurchase any shares of common stock during the thirteen weeks ended November 27, 2021.

As of November 26, 2022, approximately $ 71.5 million remained available under the stock repurchase program.

Warrants to Purchase Common Stock

During the thirteen weeks ended November 27, 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 as of November 26, 2022 and August 27, 2022.

The periodic fair value remeasurements of the warrant liability have been reflected in Loss in fair value change of warrant liability within the Consolidated Statements of Operations and Comprehensive Income.

Earnings Per Share

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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.

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

In periods in which the Company has a net loss, diluted 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 per share:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(In thousands, except per share data) May 28, 2022 May 29, 2021 May 28, 2022 May 29, 2021

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 26, 2022 November 27, 2021

Basic earnings per share computation:

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Diluted earnings per share from net income $ 0.36 $ 0.22

Diluted earnings per share calculations for the thirty-nine weeks ended May 28, 2022 excluded 1.0 million shares, issuable upon exercise of Private Warrants, that would have been anti-dilutive.

The diluted earnings per share calculations for the thirteen and thirty-nine weeks ended May 29, 2021 excluded 4.3 million shares and 3.9 million shares, issuable upon exercise of Private Warrants, respectively, that would have been anti-dilutive.

Diluted earnings per share calculations for the thirteen and thirty-nine weeks ended May 28, 2022 excluded 0.3 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 thirty-nine weeks ended May 29, 2021 excluded an immaterial number of shares and 0.2 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 thirty-nine weeks ended May 28, 2022 and May 29, 2021 excluded an immaterial number of non-vested stock units that would have been anti-dilutive.

Diluted earnings per share calculations for the thirteen weeks ended November 26, 2022 and November 27, 2021 excluded 0.4 million shares and 0.2 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 weeks ended November 26, 2022 and November 27, 2021 excluded 0.1 million non-vested stock units and an immaterial number of non-vested stock units, respectively, that would have been anti-dilutive.

Diluted earnings per share calculations 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.

Omnibus Incentive Plan

Stock-based compensation includes stock options, restricted stock units, performance stock unit awards and stock appreciation rights, which are awarded to employees, directors, and consultants of the Company.

Stock-based compensation expense is recognized on a straight-line basis over the requisite service period of the award based on their grant date fair value.

Stock-based compensation expense for equity-classified awards is recognized on a straight-line basis over the requisite service period of the award based on their grant date fair value.

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 $ 3.0 million and $ 2.2 million in the thirteen weeks ended May 28, 2022 and May 29, 2021, respectively, and $ 8.7 million and $ 5.8 million in the thirty-nine weeks ended May 28, 2022 and May 29, 2021, respectively.

The Company recorded stock-based compensation expense of $ 3.3 million and $ 2.6 million in the thirteen weeks ended November 26, 2022 and November 27, 2021, respectively.

Stock Options

The following table summarizes stock option activity for the thirty-nine weeks ended May 28, 2022:

The following table summarizes stock option activity for the thirteen weeks ended November 26, 2022:

Shares underlying options Weighted average

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Forfeited — —

Outstanding as of May 28, 2022 2,776,551 $ 18.04 6.35

Vested and expected to vest as of May 28, 2022 2,776,551 $ 18.04 6.35

Exercisable as of May 28, 2022 2,164,158 $ 14.44 5.66

As of May 28, 2022, the Company had $ 5.0 million of total unrecognized compensation cost related to stock options that will be recognized over a weighted average period of 1.8 years.

During the thirty-nine weeks ended May 28, 2022 and May 29, 2021, the Company received $ 4.3 million and $ 0.7 million in cash from stock option exercises, respectively.

Outstanding as of November 26, 2022 2,597,121 $ 19.54 6.09

Vested and expected to vest as of November 26, 2022 2,597,121 $ 19.54 6.09

Exercisable as of November 26, 2022 2,064,196 $ 15.62 5.42

As of November 26, 2022, the Company had $ 6.0 million of total unrecognized compensation cost related to stock options that will be recognized over a weighted average period of 1.9 years.

During the thirteen weeks ended November 26, 2022 and November 27, 2021, the Company received $ 4.6 million and $ 0.3 million in cash from stock option exercises, respectively.

Restricted Stock Units

The following table summarizes restricted stock unit activity for the thirty-nine weeks ended May 28, 2022:

The following table summarizes restricted stock unit activity for the thirteen weeks ended November 26, 2022:

Units Weighted average

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Forfeited — —

Non-vested as of May 28, 2022 476,166 $ 30.55

As of May 28, 2022, the Company had $ 10.3 million of total unrecognized compensation cost related to restricted stock units that will be recognized over a weighted average period of 1.7 years.

Non-vested as of November 26, 2022 530,615 $ 34.78

As of November 26, 2022, the Company had $ 15.7 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 thirty-nine weeks ended May 28, 2022, the Board of Directors granted performance stock units under the Company’s equity compensation plan.

During the thirteen weeks ended November 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 thirty-nine weeks ended May 28, 2022:

The following table summarizes performance stock unit activity for the thirteen weeks ended November 26, 2022:

Units Weighted average

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Forfeited ( 20,338 ) 27.39

Non-vested as of May 28, 2022 255,538 $ 32.80

As of May 28, 2022, the Company had $ 4.3 million of total unrecognized compensation cost related to performance stock units that will be recognized over a weighted average period of 1.3 years.

Non-vested as of November 26, 2022 212,862 $ 42.25

As of November 26, 2022, the Company had $ 6.0 million of total unrecognized compensation cost related to performance stock units that will be recognized over a weighted average period of 1.7 years.

Stock Appreciation Rights

Stock appreciation rights (“SARs”) permit the holder to participate in the appreciation of the Company’s common stock price and are awarded to non-employee consultants of the Company.

The Company’s SARs settle in shares of its common stock once the applicable vesting criteria has been met.

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 thirty-nine weeks ended May 28, 2022:

The Company’s SARs settle in shares of its common stock once the applicable vesting criteria have been met.

The SARs outstanding as of November 26, 2022 cliff vest two years from the date of grant and must be exercised within five years .

The following table summarizes SARs activity for the thirteen weeks ended November 26, 2022:

Shares underlying SARs Weighted average

exercise price Weighted average remaining contractual life (years)

exercise price

Outstanding as of August 27, 2022 150,000 $ 24.20

Granted 150,000 37.67

Exercised ( 150,000 ) 24.20

Forfeited — —

Outstanding as of May 28, 2022 150,000 $ 24.20 7.43

Vested and expected to vest as of May 28, 2022 150,000 $ 24.20 7.43

Exercisable as of May 28, 2022 — $ — 0.00

As of May 28, 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 0.4 years.

Outstanding as of November 26, 2022 150,000 $ 37.67

The SARs exercised in the thirteen weeks ended November 26, 2022 resulted in a net issuance of 38,850 shares of the Company’s common stock.

The SARs granted in the thirteen weeks ended November 26, 2022 are liability-classified;

therefore the related stock-based compensation expense is based on the vesting provisions and the fair value of the awards.

Restructuring and Related Charges

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The Company substantially completed its restructuring activities during the third quarter of fiscal 2022;

therefore no restructuring or restructuring-related costs were incurred in the thirteen weeks ended November 26, 2022.

In the thirteen weeks ended November 27, 2021, the Company incurred an immaterial amount of restructuring and restructuring-related costs.

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

The one-time termination benefits and employee severance costs incurred in relation to these restructuring activities were accounted for in accordance with ASC Topic 420, Exit or Disposal Cost Obligations, and ASC Topic 712, Compensation - Nonretirement Postemployment Benefits, respectively.

The Company recognized a liability and the related expense for these restructuring costs when the liability was incurred and could be measured.

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

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

Changes to the restructuring liability during the thirty-nine weeks ended May 28, 2022 were as follows:

(In thousands) Termination benefits and severance Other Restructuring liability

Balance as of August 28, 2021 $ 851 $ — $ 851

Charges 52 76 128

Cash payments ( 903 ) ( 76 ) ( 979 )

Balance as of May 28, 2022 $ — $ — $ —

The Company’s total restructuring and restructuring-related costs incurred in the thirty-nine weeks ended May 28, 2022 were $ 0.1 million, which included an immaterial gain on lease termination related to its lease in the Netherlands in addition to the restructuring costs shown above.

Because the Company substantially completed its restructuring activities during the third quarter of fiscal 2022, no such restructuring or restructuring-related costs were incurred in the thirteen weeks ended May 28, 2022.

In the thirteen and thirty-nine weeks ended May 29, 2021, the Company incurred a total of $ 0.2 million and $ 4.0 million in restructuring and restructuring-related costs, respectively.

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