What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-01-04 compared with 2023-06-29 · 88 added, 155 removed, 385 unchanged (39% of the section changed)

3 unchanged sentences

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

May 27, 2023 August 27, 2022

November 25, 2023 August 26, 2023

Current assets:

39 unchanged sentences

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

Common stock, $0.01 par value, 600,000,000 shares authorized, 101,912,526 and 101,322,834 shares issued at May 27, 2023 and August 27, 2022, respectively 1,019 1,013

Treasury stock, 2,365,100 shares and 1,818,754 shares at cost at May 27, 2023 and August 27, 2022, respectively ( 78,451 ) ( 62,003 )

Common stock, $0.01 par value, 600,000,000 shares authorized, 102,175,233 and 101,929,868 shares issued at November 25, 2023 and August 26, 2023, respectively 1,022 1,019

Treasury stock, 2,365,100 shares and 2,365,100 shares at cost at November 25, 2023 and August 26, 2023, respectively ( 78,451 ) ( 78,451 )

Additional paid-in-capital

11 unchanged sentences

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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

May 27, 2023 May 28, 2022 May 27, 2023 May 28, 2022

Thirteen Weeks Ended

November 25, 2023 November 26, 2022

Net sales $ 308,678 $ 300,878

10 unchanged sentences

Interest expense ( 6,034 ) ( 7,055 )

Loss in fair value change of warrant liability — — — ( 30,062 )

Gain on foreign currency transactions 226 108

17 unchanged sentences

(Unaudited, dollars in thousands)

Thirty-Nine Weeks Ended

May 27, 2023 May 28, 2022

Thirteen Weeks Ended

November 25, 2023 November 26, 2022

Operating activities

4 unchanged sentences

Stock compensation expense 4,168 3,313

Change in fair value change of warrant liability — 30,062

Estimated credit losses 51 ( 141 )

Unrealized loss (gain) on foreign currency transactions ( 74 ) ( 503 )

Unrealized gain on foreign currency transactions ( 226 ) ( 108 )

Deferred income taxes 4,084 3,206

Amortization of operating lease right-of-use asset 1,735 1,660

Gain on lease termination — ( 30 )

Other 301 571

9 unchanged sentences

Net cash provided by operating activities

110,412 67,363

Investing activities

Purchases of property and equipment ( 744 ) ( 1,151 )

Issuance of note receivable — ( 2,400 )

Investments in intangible and other assets ( 56 ) ( 87 )

5 unchanged sentences

Payments on finance lease obligations ( 61 ) ( 78 )

Cash received on repayment of note receivable 600 —

Repurchase of common stock — ( 16,448 )

Principal payments of long-term debt ( 10,000 ) ( 6,500 )

Deferred financing costs ( 2,694 ) ( 544 )

Net cash used in financing activities

6 unchanged sentences

$ 121,391 $ 54,144

Thirty-Nine Weeks Ended

May 27, 2023 May 28, 2022

Thirteen Weeks Ended

November 25, 2023 November 26, 2022

Supplemental disclosures of cash flow information

2 unchanged sentences

Cash paid for taxes

$ 19,542 $ 43,430

Non-cash investing and financing transactions

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

Operating lease right-of-use assets exchanged for operating lease liabilities $ — $ 6,881

Non-cash credits for repayment of note receivable $ 229 $ —

Non-cash additions to property and equipment $ 99 $ —

Non-cash additions to intangible assets $ 75 $ 53

11 unchanged sentences

Shares issued upon vesting of restricted stock units and performance stock units 245,365 3 — — ( 3,645 ) — — ( 3,642 )

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 — — — — — 25,642 — 25,642

Stock-based compensation — — — — 2,739 — — 2,739

Foreign currency translation adjustments — — — — — — 53 53

Shares issued upon vesting of restricted stock units 4,584 — — — ( 103 ) — — ( 103 )

Exercise of options to purchase common stock — — — — — — — —

Balance at February 25, 2023 101,873,171 $ 1,019 2,365,100 ( 78,451 ) 1,295,584 $ 275,883 ( 2,120 ) 1,491,915

Net income — — — — — $ 35,431 — 35,431

Stock-based compensation — — — — 3,844 — — 3,844

Foreign currency translation adjustments — — — — — — ( 262 ) ( 262 )

Shares issued upon vesting of restricted stock units 18,960 1 — — ( 355 ) — — ( 354 )

Exercise of options to purchase common stock 20,395 ( 1 ) — — 245 — — 244

Balance at May 27, 2023 101,912,526 1,019 2,365,100 ( 78,451 ) 1,299,318 311,314 ( 2,382 ) 1,530,818

Balance at November 25, 2023 102,175,233 1,022 2,365,100 ( 78,451 ) 1,303,411 383,517 ( 2,321 ) 1,607,178

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

3 unchanged sentences

Stock-based compensation — — — — 3,237 — — 3,237

Repurchase of Common Stock — — 546,346 ( 16,448 ) — — — ( 16,448 )

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

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

Warrant conversion — — — — — — — —

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

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

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

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

See accompanying notes to the unaudited consolidated financial statements.

4 unchanged sentences

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, and other product offerings.

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®, Quest® and Quest Hero TM 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.

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

The Company distributes its 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.

13 unchanged sentences

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 26, 2023, included in the Company’s Annual Report on Form 10-K (“Annual Report”) filed with the SEC on October 24, 2023.

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

5 unchanged sentences

As a result, the amendments in ASU 2020-04 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, 2024.

The amendments of these ASUs are effective for all entities and should be applied on a prospective basis.

The amendments of these ASUs are effective for all entities and are applied on a prospective basis.

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

3 unchanged sentences

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

In November 2023, the Financial Accounting Standards Board (“FASB”) issues Accounting Standard Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the provisions of the amendments and the effect on its future 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.

2 unchanged sentences

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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(In thousands) May 27, 2023 May 28, 2022 May 27, 2023 May 28, 2022

Thirteen Weeks Ended

(In thousands) November 25, 2023 November 26, 2022

North America (1)

5 unchanged sentences

(1) The North America geographic area consists of net sales substantially related to the United States and there is no individual foreign country to which more than 10% of the Company’s net sales are attributed or that is otherwise deemed individually material.

Charges related to credit loss on accounts receivables from transactions with external customers were $ 0.2 million and $ 0.4 million for the thirteen and thirty-nine weeks ended May 27, 2023, respectively.

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.

As of May 27, 2023 and August 27, 2022, the allowances for doubtful accounts related to these accounts receivable were $ 1.8 million and $ 1.2 million, respectively.

Additionally, as of May 27, 2023, 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.

Charges related to credit loss on accounts receivables from transactions with external customers were $ 0.1 million for the thirteen weeks ended November 25, 2023, and $( 0.1 ) million for the thirteen weeks ended November 26, 2022.

As of November 25, 2023 and August 26, 2023, the allowances for doubtful accounts related to these accounts receivable were $ 0.9 million and $ 1.1 million, respectively.

Additionally, as of November 25, 2023, 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 27, 2023 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 and thirty-nine weeks ended May 27, 2023 or since the inception of the Company.

As of November 25, 2023 and August 26, 2023, Goodwill in the Consolidated Balance Sheets was $ 543.1 million.

There were no impairment charges related to goodwill during the thirteen weeks ended November 25, 2023 or since the inception of the Company.

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

November 25, 2023

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

17 unchanged sentences

Software and website development costs 3 - 5 years 6,328 5,356 972

Intangible assets in progress 3 - 5 years 79 — 79

$ 1,183,407 $ 75,288 $ 1,108,119

Changes in Intangible assets, net during the thirty-nine weeks ended May 27, 2023 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 May 27, 2023 and May 28, 2022, respectively, and $ 11.8 million and $ 11.9 million for the thirty-nine weeks ended May 27, 2023 and May 28, 2022, respectively.

There were no impairment charges related to intangible assets during the thirteen and thirty-nine weeks ended May 27, 2023 and May 28, 2022.

Changes in Intangible assets, net during the thirteen weeks ended November 25, 2023 were primarily related to recurring amortization expense.

Amortization expense related to intangible assets was $ 3.9 million for the thirteen weeks ended November 25, 2023 and $ 3.9 million for the thirteen weeks ended November 26, 2022.

There were no impairment charges related to intangible assets during the thirteen weeks ended November 25, 2023 and November 26, 2022.

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

35 unchanged sentences

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 covenants as of May 27, 2023 and August 27, 2022, respectively.

The Company was in compliance with all covenants as of November 25, 2023 and August 26, 2023, respectively.

Long-term debt consists of the following:

(In thousands) May 27, 2023 August 27, 2022

Term Facility (effective rate of 7.7% at May 27, 2023)

(In thousands) November 25, 2023 August 26, 2023

Term Facility (effective rate of 8.0% at November 25, 2023)

$ 275,000 $ 285,000

Finance lease liabilities (effective rate of 5.6% at May 27, 2023)

Finance lease liabilities (effective rate of 5.6% at November 25, 2023)

Deferred financing fees 2,968 3,351

2 unchanged sentences

Long-term debt, net of deferred financing fees $ 272,032 $ 281,649

The Company is no t required to make principal payments on the Term Facility over the twelve months following the period ended May 27, 2023.

The Company is no t required to make principal payments on the Term Facility over the twelve months following the period ended November 25, 2023.

The outstanding balance of the Term Facility is due upon its maturity in March 2027.

As of May 27, 2023, the Company had letters of credit in the amount of $ 3.5 million outstanding.

As of November 25, 2023, 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 27, 2023.

No amounts were drawn against these letters of credit at November 25, 2023.

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 27, 2023 and August 27, 2022, the book value of the Company’s debt approximated fair value.

As of November 25, 2023 and August 26, 2023, 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.

6 unchanged sentences

These valuations require significant judgment.

Level 3 Measurements

During the thirty-nine weeks ended May 28, 2022, 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 May 27, 2023 and August 27, 2022.

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

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

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

Significant judgment is required in determining the expected volatility, historically the key assumption, of the Private Warrants.

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 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 thirty-nine weeks ended May 28, 2022 was a gain of $ 30.1 million.

Components of the balance sheet such as accounts receivable, cash and cash equivalents and others approximated fair value as of November 25, 2023.

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

Thirty-Nine Weeks Ended

(In thousands) May 27, 2023 May 28, 2022

Thirteen Weeks Ended

(In thousands) November 25, 2023 November 26, 2022

Income before income taxes $ 47,108 $ 45,556

1 unchanged sentence

Effective tax rate 24.5 % 21.3 %

The effective tax rate for the thirty-nine weeks ended May 27, 2023 was 7.2 % less than the effective tax rate for the thirty-nine weeks ended May 28, 2022, 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 effective tax rate for the thirteen weeks ended November 25, 2023 was 3.2 % more than the effective tax rate for the thirteen weeks ended November 26, 2022, which was primarily driven by permanent differences.

The components of lease expense were as follows:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(In thousands) Statements of Operations Caption May 27, 2023 May 28, 2022 May 27, 2023 May 28, 2022

Thirteen Weeks Ended

(In thousands) Statements of Operations Caption November 25, 2023 November 26, 2022

Operating lease cost:

Lease cost Cost of goods sold and

General and administrative $ 2,245 $ 2,278 $ 6,745 $ 6,806

Lease cost Cost of goods sold and General and administrative $ 2,259 $ 2,252

Variable lease cost (1)

Cost of goods sold and

General and administrative 1,047 787 2,565 2,300

Cost of goods sold and General and administrative 796 738

Total operating lease cost 3,055 2,990

6 unchanged sentences

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

(In thousands) Balance Sheets Caption May 27, 2023 August 27, 2022

(In thousands) Balance Sheets Caption November 25, 2023 August 26, 2023

Operating lease right-of-use assets Other long-term assets $ 38,286 $ 40,022

6 unchanged sentences

Total lease liabilities $ 43,113 $ 44,981

Future maturities of lease liabilities as of May 27, 2023 were as follows:

Future maturities of lease liabilities as of November 25, 2023 were as follows:

(In thousands) Operating Leases Finance Leases

1 unchanged sentence

Remainder of 2024 7,145 84

2024 9,424 145

Thereafter 13,496 —

3 unchanged sentences

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

May 27, 2023 August 27, 2022

November 25, 2023 August 26, 2023

Weighted-average remaining lease term (in years)

5 unchanged sentences

Supplemental and other information related to leases was as follows:

Thirty-Nine Weeks Ended

(In thousands) May 27, 2023 May 28, 2022

Thirteen Weeks Ended

(In thousands) November 25, 2023 November 26, 2022

Cash paid for amounts included in the measurement of lease liabilities

6 unchanged sentences

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

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

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

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

Based on the terms of the contracts in place and achievement of performance conditions as of May 27, 2023, the Company will be required to make payments of $ 3.3 million over the next year.

Based on the terms of the contracts in place and achievement of performance conditions as of November 25, 2023, the Company will be required to make payments of $ 2.9 million over the next year.

Stockholders’ Equity

5 unchanged sentences

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

The Company did not repurchase any shares of common stock during the thirteen weeks ended May 27, 2023.

During the thirty-nine weeks ended May 27, 2023, the Company repurchased 546,346 shares of common stock at an average share price of $ 30.11 per share.

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 .

As of May 27, 2023, approximately $ 71.5 million remained available under the stock repurchase program.

Warrants to Purchase Common Stock

During the thirteen and thirty-nine weeks ended May 28, 2022, 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 27, 2023 and August 27, 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 have been reflected in Loss in fair value change of warrant liability within the Consolidated Statements of Operations and Comprehensive Income.

The Company did not repurchase any shares of common stock during the thirteen weeks ended November 25, 2023.

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

As of November 25, 2023, approximately $ 71.5 million remained available under the stock repurchase program.

Earnings Per Share

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

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

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

During periods when the effect of the outstanding Private Warrants was anti-dilutive, the share settlement 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 table reconciles 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 27, 2023 May 28, 2022 May 27, 2023 May 28, 2022

Thirteen Weeks Ended

(In thousands, except per share data) November 25, 2023 November 26, 2022

Basic earnings per share computation:

10 unchanged sentences

Diluted earnings per share from net income $ 0.35 $ 0.36

Diluted earnings per share calculations for the thirteen and thirty-nine weeks ended May 27, 2023 excluded 0.7 million and 0.6 million shares of common stock issuable upon exercise of stock options, respectively, that would have been anti-dilutive.

Diluted earnings per share calculations for the thirteen and thirty-nine weeks ended May 28, 2022 excluded 0.3 million and 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 27, 2023 excluded an immaterial amount of non-vested stock units that would have been anti-dilutive.

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

The 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.

Diluted earnings per share calculations for the thirteen weeks ended November 25, 2023 and November 26, 2022 excluded 0.8 million and 0.4 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 25, 2023 and November 26, 2022 excluded an immaterial number of shares and 0.1 million shares of non-vested stock units, respectively, that would have been anti-dilutive.

Omnibus Incentive Plan

2 unchanged sentences

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 $ 4.1 million and $ 3.0 million in the thirteen weeks ended May 27, 2023 and May 28, 2022, respectively, and $ 10.5 million and $ 8.7 million in the thirty-nine weeks ended May 27, 2023 and May 28, 2022, respectively.

The Company recorded stock-based compensation expense of $ 4.2 million and $ 3.3 million in the thirteen weeks ended November 25, 2023 and November 26, 2022, respectively.

Stock Options

The following table summarizes stock option activity for the thirty-nine weeks ended May 27, 2023:

The following table summarizes stock option activity for the thirteen weeks ended November 25, 2023:

Shares underlying options Weighted average

4 unchanged sentences

Forfeited ( 3,815 ) 39.38

Outstanding as of May 27, 2023 2,678,972 $ 20.41 5.86

Vested and expected to vest as of May 27, 2023 2,678,972 $ 20.41 5.86

Exercisable as of May 27, 2023 2,029,757 $ 15.60 4.93

As of May 27, 2023, the Company had $ 6.4 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 27, 2023 and May 28, 2022, the Company received $ 5.0 million and $ 4.3 million in cash from stock option exercises, respectively.

Outstanding as of November 25, 2023 2,682,280 $ 20.47 5.35

Vested and expected to vest as of November 25, 2023 2,682,280 $ 20.47 5.35

Exercisable as of November 25, 2023 2,188,820 $ 16.69 4.64

As of November 25, 2023, the Company had $ 4.8 million of total unrecognized compensation cost related to stock options that will be recognized over a weighted average period of 1.5 years.

During the thirteen weeks ended November 25, 2023 the Company did not receive cash from stock option exercises.

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

Restricted Stock Units

The following table summarizes restricted stock unit activity for the thirty-nine weeks ended May 27, 2023:

The following table summarizes restricted stock unit activity for the thirteen weeks ended November 25, 2023:

Units Weighted average

4 unchanged sentences

Forfeited ( 7,589 ) 38.69

Non-vested as of May 27, 2023 489,286 $ 35.31

As of May 27, 2023, the Company had $ 11.9 million of total unrecognized compensation cost related to restricted stock units that will be recognized over a weighted average period of 1.5 years.

Non-vested as of November 25, 2023 550,023 $ 37.47

As of November 25, 2023, the Company had $ 15.6 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 27, 2023, the Company granted performance stock units under its equity compensation plan.

During the thirteen weeks ended November 25, 2023, the Company granted performance stock units under its 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 27, 2023:

The following table summarizes performance stock unit activity for the thirteen weeks ended November 25, 2023:

Units Weighted average

4 unchanged sentences

Forfeited — —

Non-vested as of May 27, 2023 195,959 $ 42.85

As of May 27, 2023, the Company had $ 4.2 million of total unrecognized compensation cost related to performance stock units that will be recognized over a weighted average period of 1.2 years.

Non-vested as of November 25, 2023 180,683 $ 59.28

As of November 25, 2023, the Company had $ 7.6 million of total unrecognized compensation cost related to performance stock units that will be recognized over a weighted average period of 2.2 years.

Stock Appreciation Rights

1 unchanged sentence

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

The SARs outstanding as of May 27, 2023 cliff vest two years from the date of grant and must be exercised within five years .

The following table summarizes SARs activity for the thirty-nine weeks ended May 27, 2023:

The SARs outstanding as of November 25, 2023 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 25, 2023:

Shares underlying SARs Weighted average

1 unchanged sentence

Outstanding as of August 26, 2023 150,000 $ 37.67

Granted 150,000 37.67

Exercised — —

Forfeited — —

Outstanding as of May 27, 2023 150,000 $ 37.67

The SARs exercised in the thirty-nine weeks ended May 27, 2023 resulted in a net issuance of 38,850 shares of the Company’s common stock.

The SARs granted in the thirty-nine weeks ended May 27, 2023 are liability-classified;

Outstanding as of November 25, 2023 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

In May 2020, the Company announced certain restructuring activities in conjunction with the implementation of the Company’s future-state organization design, which created a fully integrated organization with its completed acquisition of Quest Nutrition, LLC on November 7, 2019.

The new organization design became effective on August 31, 2020.

These restructuring plans primarily included workforce reductions, changes in management structure, and the relocation of business activities from one location to another.

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 and thirty-nine weeks ended May 27, 2023 and the thirteen weeks ended May 28, 2022.

During the thirty-nine weeks ended May 28, 2022, the Company incurred $ 0.1 million 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.

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