What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-06-27 compared with 2024-04-04 · 104 added, 83 removed, 194 unchanged (49% of the section changed)

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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, and other product offerings.

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 Quest® and Atkins® brand names.

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

On April 29, 2024, we entered into a stock purchase agreement (the “Purchase Agreement”) to acquire Only What You Need, Inc.

(“OWYN”), a plant-based protein food company (the “Acquisition”), for approximately $280.0 million.

On June 13, 2024, pursuant to the Purchase Agreement, we completed the acquisition of OWYN for approximately $280.0 million, subject to certain customary adjustments for levels of cash, indebtedness, net working capital, purchase price adjustments and transaction related expenses as of the closing date.

The addition of OWYN introduces a third complementary plant-based, ready-to-drink brand within our portfolio.

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

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.

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 and OWYN ™ for those looking for a plant-based ready-to-drink protein shake offering.

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.

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During fiscal 2023, the Company was affected by the unfavorable effects of higher raw material costs, higher co-manufacturing costs, and supply chain challenges, including supply chain disruptions resulting from labor shortages and disruptions in ingredients.

During the thirteen and twenty-six weeks ended February 24, 2024, our business performance improved as strong Quest sales volume more than offset continued softness in Atkins.

During the thirteen and thirty-nine weeks ended May 25, 2024, our business performance improved as strong Quest sales volume more than offset continued softness in Atkins.

The Company benefited from lower ingredient and packaging costs which resulted in gross margin expansion versus fiscal 2023.

The Company continues to engage and have discussions with its contract manufacturers and logistics and transportation providers to have its cost structure reflect lower market prices.

We believe the Company's strategy and positioning will continue to drive profitable growth for our product offerings and growth within the growing nutritional snacking category.

The Company is monitoring key ingredient inflation which may affect profitability, however we believe the Company's strategy and positioning will continue to drive profitable growth for our product offerings and growth within the growing nutritional snacking category.

Key Financial Definitions

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Operating expenses.

Operating expenses consist primarily of selling and marketing, general and administrative, and depreciation and amortization expense.

Operating expenses consist primarily of selling and marketing, general and administrative, and depreciation and amortization, and business transaction costs.

The following is a brief description of the components of operating expenses:

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Depreciation and amortization costs consist of costs associated with the depreciation of fixed assets and capitalized leasehold improvements and amortization of intangible assets.

• Business Transaction Costs.

Business transaction costs are comprised of legal, due diligence, consulting and accounting firm expenses associated with the process of actively pursuing potential and completed business combinations, including the Acquisition of OWYN.

Results of Operations

During the thirteen weeks ended February 24, 2024, our net sales increased to $312.2 million compared to $296.6 million for the thirteen weeks ended February 25, 2023, driven by Quest volume growth, which more than offset continued softness in Atkins net sales, resulting in a 5.1% increase in our aggregate North America net sales.

During the thirteen weeks ended May 25, 2024, our net sales increased to $334.8 million compared to $324.8 million for the thirteen weeks ended May 27, 2023, driven by Quest volume growth, which more than offset continued softness in Atkins net sales, resulting in a 3.2% increase in our aggregate North America net sales.

Gross profit and gross profit margin improved driven by higher sales volumes and lower ingredient and packaging costs.

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See “Reconciliation of EBITDA and Adjusted EBITDA” below for a reconciliation of EBITDA and Adjusted EBITDA to net income for each applicable period.

Comparison of Unaudited Results for the Thirteen Weeks Ended February 24, 2024, and the Thirteen Weeks Ended February 25, 2023

Comparison of Unaudited Results for the Thirteen Weeks Ended May 25, 2024, and the Thirteen Weeks Ended May 27, 2023

The following unaudited table presents, for the periods indicated, selected information from our Consolidated Statements of Operations and Comprehensive Income, including information presented as a percentage of net sales:

Thirteen Weeks Ended Thirteen Weeks Ended

(In thousands) February 24, 2024 % of Net Sales February 25, 2023 % of Net Sales

(In thousands) May 25, 2024 % of Net Sales May 27, 2023 % of Net Sales

Net sales $ 334,757 100.0 % $ 324,792 100.0 %

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Depreciation and amortization 4,142 1.2 % 4,363 1.3 %

Business transaction costs 2,703 0.8 % — — %

Total operating expenses 74,852 22.4 % 65,041 20.0 %

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Interest expense (5,028) (1.5) % (7,649) (2.4) %

(Loss) on foreign currency transactions (23) — % (214) (0.1) %

(Loss) gain on foreign currency transactions (12) — % 180 0.1 %

Other income 102 — % 4 — %

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See “Reconciliation of EBITDA and Adjusted EBITDA” below for a reconciliation of net income to EBITDA and Adjusted EBITDA for each applicable period.

Net sales were $312.2 million for the thirteen weeks ended February 24, 2024, compared to $296.6 million for the thirteen weeks ended February 25, 2023, representing an increase of $15.6 million, driven primarily by Quest volume growth which offset Atkins softness.

North America net sales increased 5.1% in the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023, and International net sales increased 12.2% during the same period.

Net sales were $334.8 million for the thirteen weeks ended May 25, 2024, compared to $324.8 million for the thirteen weeks ended May 27, 2023, representing an increase of $10.0 million, driven primarily by Quest volume growth which offset Atkins softness.

North America net sales increased 3.2% in the thirteen weeks ended May 25, 2024, compared to the thirteen weeks ended May 27, 2023, and International net sales decreased 2.4% during the same period.

Cost of goods sold .

Cost of goods sold increased $1.5 million, or 0.8%, for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023.

The cost of goods sold increase was primarily driven by higher sales volumes in the thirteen weeks ended February 24, 2024.

Cost of goods sold decreased $4.4 million, or 2.1%, for the thirteen weeks ended May 25, 2024, compared to the thirteen weeks ended May 27, 2023.

The cost of goods sold decrease was primarily driven by lower ingredient and packaging costs in the thirteen weeks ended May 25, 2024.

Gross profit.

Gross profit increased by $14.1 million, or 13.8%, for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023.

Additionally, gross profit of $116.9 million, or 37.4% of net sales, for the thirteen weeks ended February 24, 2024, increased 280 basis points from 34.6% of net sales for the thirteen weeks ended February 25, 2023.

Gross profit increased by $14.4 million, or 12.1%, for the thirteen weeks ended May 25, 2024, compared to the thirteen weeks ended May 27, 2023.

Additionally, gross profit of $133.6 million, or 39.9% of net sales, for the thirteen weeks ended May 25, 2024, increased 320 basis points from 36.7% of net sales for the thirteen weeks ended May 27, 2023.

The increase in gross profit margin was primarily driven by lower ingredient and packaging costs.

Operating expenses .

Operating expenses increased $8.6 million, or 14.2%, for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023 due to the following:

Operating expenses increased $9.8 million, or 15.1%, for the thirteen weeks ended May 25, 2024, compared to the thirteen weeks ended May 27, 2023 due to the following:

• Selling and marketing.

Selling and marketing expenses increased $4.7 million, or 15.7%, for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023, due to increased expenses related to growth initiatives and higher advertising costs.

Selling and marketing expenses increased $6.3 million, or 20.9%, for the thirteen weeks ended May 25, 2024, compared to the thirteen weeks ended May 27, 2023, due to increased expenses related to growth initiatives and higher advertising costs.

• General and administrative.

General and administrative expenses increased $4.0 million, or 15.4%, for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023.

The increase in general and administrative expenses was primarily attributable to an increase of $1.5 million in stock-based compensation, higher employee costs and corporate expenses.

General and administrative expenses increased $1.0 million, or 3.4%, for the thirteen weeks ended May 25, 2024, compared to the thirteen weeks ended May 27, 2023.

The increase in general and administrative expenses was primarily attributable to an increase of $1.9 million in employee-related costs, $0.3 million in stock-based compensation, and higher corporate expenses and other costs.

These increases were partially offset by $2.4 million in term loan transaction fees incurred in the prior year.

• Depreciation and amortization.

Depreciation and amortization expense was $4.2 million for the thirteen weeks ended February 24, 2024 and $4.3 million for the thirteen weeks ended February 25, 2023, respectively.

Depreciation and amortization expense was $4.1 million for the thirteen weeks ended May 25, 2024 and $4.4 million for the thirteen weeks ended May 27, 2023, respectively.

• Business transaction costs.

Business transaction costs were $2.7 million for the thirteen weeks ended May 25, 2024 and were comprised of expenses related to the Acquisition of OWYN.

Interest income.

Interest income increased by $0.7 million for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023, due to higher cash balances than prior year period and the increase in interest rates.

Interest income increased by $0.5 million for the thirteen weeks ended May 25, 2024, compared to the thirteen weeks ended May 27, 2023, due to higher cash balances than the prior year period and the increase in interest rates.

Interest expense .

Interest expense decreased $2.9 million for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023, primarily due to the effect of principal payments reducing the outstanding balance of the Term Facility (as defined below) to $240.0 million as of February 24, 2024, from $365.0 million as of February 25, 2023.

Additionally, interest expense related to the amortization of deferred financing costs and debt discount decreased $0.1 million for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023.

(Loss) on foreign currency transactions.

Foreign currency transactions resulted in an immaterial loss and a loss of $0.2 million for the thirteen weeks ended February 24, 2024, and February 25, 2023, respectively.

Interest expense decreased $2.6 million for the thirteen weeks ended May 25, 2024, compared to the thirteen weeks ended May 27, 2023, primarily due to the effect of principal payments reducing the outstanding balance of the Term Facility (as defined below) to $240.0 million as of May 25, 2024, from $325.0 million as of May 27, 2023.

Additionally, interest expense related to the amortization of deferred financing costs and debt discount decreased $0.6 million for the thirteen weeks ended May 25, 2024, compared to the thirteen weeks ended May 27, 2023.

(Loss) gain on foreign currency transactions.

Foreign currency transactions resulted in an immaterial loss and a gain of $0.2 million for the thirteen weeks ended May 25, 2024, and May 27, 2023, respectively.

The variance is attributable to changes in foreign currency rates related to our international operations.

Income tax expense.

Income tax expense increased $1.9 million for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023.

The increase in our income tax expense was primarily driven by higher income from operations and changes in permanent differences.

Net income was $33.1 million for the thirteen weeks ended February 24, 2024, an increase of $7.5 million compared to net income of $25.6 million for the thirteen weeks ended February 25, 2023.

Net income was benefited by higher gross profit, higher interest income, and lower interest expense, partially offset by growth in marketing expenses, higher stock-based compensation expenses, and higher income tax expense.

Income tax expense increased $1.7 million for the thirteen weeks ended May 25, 2024, compared to the thirteen weeks ended May 27, 2023.

The increase in our income tax expense was primarily driven by changes in permanent differences.

Net income was $41.3 million for the thirteen weeks ended May 25, 2024, an increase of $5.9 million compared to net income of $35.4 million for the thirteen weeks ended May 27, 2023.

Adjusted EBITDA.

Adjusted EBITDA increased $6.9 million, or 13.6%, for the thirteen weeks ended February 24, 2024, compared to the thirteen weeks ended February 25, 2023, driven primarily by higher gross profit, partially offset by growth in marketing expenses.

Adjusted EBITDA increased $5.2 million, or 7.9%, for the thirteen weeks ended May 25, 2024, compared to the thirteen weeks ended May 27, 2023, driven primarily by higher gross profit, partially offset by growth in marketing expenses.

For a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, see “Reconciliation of EBITDA and Adjusted EBITDA” below.

Comparison of Unaudited Results for the Twenty-Six Weeks Ended February 24, 2024, and the Twenty-Six Weeks Ended February 25, 2023

Comparison of Unaudited Results for the Thirty-Nine Weeks Ended May 25, 2024, and the Thirty-Nine Weeks Ended May 27, 2023

Twenty-Six Weeks Ended Twenty-Six Weeks Ended

(In thousands) February 24, 2024 % of Net Sales February 25, 2023 % of Net Sales

Thirty-Nine Weeks Ended Thirty-Nine Weeks Ended

(In thousands) May 25, 2024 % of Net Sales May 27, 2023 % of Net Sales

Net sales $ 955,634 100.0 % $ 922,254 100.0 %

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Depreciation and amortization 12,711 1.3 % 13,035 1.4 %

Business transaction costs 2,703 0.3 % — — %

Total operating expenses 206,937 21.7 % 183,770 19.9 %

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Interest expense (16,658) (1.7) % (23,201) (2.5) %

Gain (loss) on foreign currency transactions 203 — % (106) — %

Gain on foreign currency transactions 191 — % 74 — %

Other income 108 — % 10 — %

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See “Reconciliation of EBITDA and Adjusted EBITDA” below for a reconciliation of net income to EBITDA and Adjusted EBITDA for each applicable period.

Net sales of $620.9 million represented an increase of $23.4 million, or 3.9%, for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023.

Net sales of $955.6 million represented an increase of $33.4 million, or 3.6%, for the thirty-nine weeks ended May 25, 2024, compared to the thirty-nine weeks ended May 27, 2023.

The increase in sales was primarily driven by Quest volume growth which offset Atkins softness.

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Cost of goods sold .

Cost of goods sold increased $5.2 million, or 1.3%, for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023.

The cost of goods sold increase was primarily driven by higher sales volumes in the twenty-six weeks ended February 24, 2024.

Cost of goods sold increased $0.7 million, or 0.1%, for the thirty-nine weeks ended May 25, 2024, compared to the thirty-nine weeks ended May 27, 2023.

The cost of goods sold increase was primarily driven by higher sales volumes in the thirty-nine weeks ended May 25, 2024.

Gross profit.

Gross profit increased $18.3 million, or 8.5%, for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023.

Additionally, gross profit of $232.0 million, or 37.4% of net sales, for the twenty-six weeks ended February 24, 2024 increased 160 basis points from 35.8% of net sales for the twenty-six weeks ended February 25, 2023, due primarily to lower ingredient and packaging costs.

Gross profit increased $32.6 million, or 9.8%, for the thirty-nine weeks ended May 25, 2024, compared to the thirty-nine weeks ended May 27, 2023.

Additionally, gross profit of $365.6 million, or 38.3% of net sales, for the thirty-nine weeks ended May 25, 2024 increased 220 basis points from 36.1% of net sales for the thirty-nine weeks ended May 27, 2023, due primarily to lower ingredient and packaging costs.

Operating expenses .

Operating expenses increased $13.4 million, or 11.2%, for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023, due to the following:

Operating expenses increased $23.2 million, or 12.6%, for the thirty-nine weeks ended May 25, 2024, compared to the thirty-nine weeks ended May 27, 2023, due to the following:

• Selling and marketing.

Selling and marketing expenses increased $8.2 million, or 13.9%, for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023, primarily due to increased expenses related to

growth initiatives and higher advertising costs.

Selling and marketing expenses increased $14.4 million, or 16.3%, for the thirty-nine weeks ended May 25, 2024, compared to the thirty-nine weeks ended May 27, 2023, primarily due to increased expenses related to growth initiatives and higher advertising costs.

• General and administrative.

General and administrative expenses increased $5.3 million, or 10.3%, for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023.

The increase in general and administrative expense was primarily attributable to a $2.2 million increase in stock-based compensation, $0.1 million increase in executive officer transition costs, and higher employee costs and corporate expenses in the twenty-six weeks ended February 24, 2024.

General and administrative expenses increased $6.3 million, or 7.7%, for the thirty-nine weeks ended May 25, 2024, compared to the thirty-nine weeks ended May 27, 2023.

The increase in general and administrative expense was primarily attributable to an increase to an increase of $4.3 million in employee-related costs, $2.5 million in stock-based compensation, and higher corporate expenses and other costs in the thirty-nine weeks ended May 25, 2024.

These increases were partially offset by $2.4 million in term loan transaction fees incurred in the prior year.

• Depreciation and amortization.

Depreciation and amortization expenses were $8.6 million and $8.7 million for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023, respectively.

Depreciation and amortization expenses were $12.7 million and $13.0 million for the thirty-nine weeks ended May 25, 2024, compared to the thirty-nine weeks ended May 27, 2023, respectively.

• Business transaction costs.

Business transaction costs were $2.7 million for the thirty-nine weeks ended May 25, 2024 and were comprised of expenses related to the Acquisition of OWYN.

Interest income.

Interest income increased by $1.8 million for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023, due to higher cash balances, the increase in interest rates, and other sources of interest income.

Interest income increased by $2.2 million for the thirty-nine weeks ended May 25, 2024, compared to the thirty-nine weeks ended May 27, 2023, due to higher cash balances, the increase in interest rates, and other sources of interest income.

Interest expense .

Interest expense decreased $3.9 million for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023, primarily due to the effect of principal payments reducing the outstanding balance of the Term Facility (as defined below) to $240.0 million as of February 24, 2024, from $365.0 million as of February 25, 2023.

Additionally, interest expense related to the amortization of deferred financing costs and debt discount decreased $0.2 million for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023.

Gain (loss) on foreign currency transactions.

Foreign currency transactions resulted in a gain of $0.2 million and a loss of $0.1 million for the twenty-six weeks ended February 24, 2024, and February 25, 2023, respectively.

Interest expense decreased $6.5 million for the thirty-nine weeks ended May 25, 2024, compared to the thirty-nine weeks ended May 27, 2023, primarily due to the effect of principal payments reducing the outstanding balance of the Term Facility (as defined below) to $240.0 million as of May 25, 2024, from $325.0 million as of May 27, 2023.

Additionally, interest expense related to the amortization of deferred financing costs and debt discount decreased $0.8 million for the thirty-nine weeks ended May 25, 2024, compared to the thirty-nine weeks ended May 27, 2023.

Gain on foreign currency transactions.

Foreign currency transactions resulted in a gain of $0.2 million and $0.1 million, respectively, for the thirty-nine weeks ended May 25, 2024, and May 27, 2023.

The variance is attributable to changes in foreign currency rates related to our international operations.

Income tax expense.

Income tax expense increased $3.7 million for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023.

Income tax expense increased $5.4 million for the thirty-nine weeks ended May 25, 2024, compared to the thirty-nine weeks ended May 27, 2023.

The increase in our income tax expense was primarily driven by higher income from operations and changes in permanent differences.

Net income was $68.7 million for the twenty-six weeks ended February 24, 2024, an increase of $7.2 million compared to net income of $61.5 million for the twenty-six weeks ended February 25, 2023.

Net income was benefited by higher gross profit, higher interest income, and lower interest expense, and was partially offset by growth in marketing expenses, higher stock-based compensation expenses, and higher income tax expense.

Net income was $110.0 million for the thirty-nine weeks ended May 25, 2024, an increase of $13.1 million compared to net income of $96.9 million for the thirty-nine weeks ended May 27, 2023.

and higher income tax expense.

Adjusted EBITDA.

Adjusted EBITDA increased $8.1 million, or 7.3% for the twenty-six weeks ended February 24, 2024, compared to the twenty-six weeks ended February 25, 2023, driven primarily by higher net gross profit, partially offset by investments in growth initiatives and higher advertising costs.

Adjusted EBITDA increased $13.4 million, or 7.5% for the thirty-nine weeks ended May 25, 2024, compared to the thirty-nine weeks ended May 27, 2023, driven primarily by higher net gross profit, partially offset by investments in growth initiatives and higher advertising costs.

For a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, see “Reconciliation of EBITDA and Adjusted EBITDA” below.

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The Company defines EBITDA as net income or loss before interest income, interest expense, income tax expense, depreciation and amortization, and Adjusted EBITDA as further adjusted to exclude the following items:

stock-based compensation expense, executive transition costs, and other non-core expenses.

stock-based compensation expense, executive transition costs, business transaction costs, term loan transaction fees, and other non-core expenses.

The Company believes that EBITDA and Adjusted EBITDA, when used in conjunction with net income, are useful to provide additional information to investors.

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EBITDA and Adjusted EBITDA may not be comparable to other similarly titled captions of other companies due to differences in the non-GAAP calculation.

The following unaudited table provides a reconciliation of EBITDA and Adjusted EBITDA to its most directly comparable GAAP measure, which is net income, for the thirteen and twenty-six weeks ended February 24, 2024, and February 25, 2023:

(In thousands) Thirteen Weeks Ended Twenty-Six Weeks Ended

February 24, 2024 February 25, 2023 February 24, 2024 February 25, 2023

The following unaudited table provides a reconciliation of EBITDA and Adjusted EBITDA to its most directly comparable GAAP measure, which is net income, for the thirteen and thirty-nine weeks ended May 25, 2024, and May 27, 2023:

(In thousands) Thirteen Weeks Ended Thirty-Nine Weeks Ended

May 25, 2024 May 27, 2023 May 25, 2024 May 27, 2023

Net income $ 41,334 $ 35,431 $ 110,018 $ 96,933

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Executive transition costs 355 737 721 1,158

Business transaction costs 2,703 — 2,703 —

Term loan transaction fees — 2,423 — 2,423

400 (178) 199 (64)

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Our principal uses of cash have been working capital, debt service, repurchases of our common stock, and acquisition opportunities.

We had $135.9 million in cash as of February 24, 2024.

We had $208.7 million in cash as of May 25, 2024.

We believe our sources of liquidity and capital will be sufficient to finance our continued operations, growth strategy and additional expenses we expect to incur for at least the next twelve months.

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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 covenants as of February 24, 2024, and August 26, 2023, respectively.

At February 24, 2024, the outstanding balance of the Term Facility was $240.0 million.

We are not required to make principal payments on the Term Facility over the twelve months following the period ended February 24, 2024.

The Company was in compliance with all covenants as of May 25, 2024, and August 26, 2023, respectively.

At May 25, 2024, the outstanding balance of the Term Facility was $240.0 million.

We are not required to make principal payments on the Term Facility over the twelve months following the period ended May 25, 2024.

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

As of February 24, 2024, there were no amounts drawn against the Revolving Credit Facility.

As of May 25, 2024, there were no amounts drawn against the Revolving Credit Facility.

Acquisition Financing

On April 29, 2024, the Company entered into a Purchase Agreement to acquire OWYN, a plant-based protein food company, for approximately $280.0 million.

On June 13, 2024, pursuant to the Purchase Agreement, the Company completed the acquisition of OWYN for approximately $280.0 million, subject to certain customary adjustments for levels of cash, indebtedness, net working capital, purchase price adjustments and transaction related expenses as of the closing date.

On June 13, 2024, the Company entered into a sixth amendment (the “2024 Incremental Facility Amendment”) to the Credit Agreement to increase the principal borrowed on the Term Facility by $250.0 million.

The terms of the incremental borrowing are the same as the terms of the outstanding borrowing under the Term Facility.

The 2024 Incremental Facility Amendment was executed to partially finance the acquisition of OWYN on June 13, 2024.

No amounts under the Term Facility were repaid as a result of the execution of the 2024 Incremental Facility Amendment.

Stock Repurchase Program

On October 21, 2022, we announced that our Board of Directors approved the addition of $50.0 million to our stock repurchase program, resulting in authorized stock repurchases of up to an aggregate of $150.0 million.

The Company did not repurchase any shares of common stock during the twenty-six weeks ended February 24, 2024.

During the twenty-six weeks ended February 25, 2023, the Company repurchased 546,346 shares of common stock at an average share price of $30.11 per share.

As of February 24, 2024, approximately $71.5 million remained available for repurchases under our $150.0 million stock repurchase program.

The Company did not repurchase any shares of common stock during the thirty-nine weeks ended May 25, 2024.

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.

As of May 25, 2024, approximately $71.5 million remained available for repurchases under our $150.0 million stock repurchase program.

Refer to Note 10, Stockholders’ Equity, of the Notes to Unaudited Consolidated Financial Statements in this Report for additional information related to our stock repurchase program.

The following table sets forth the major sources and uses of cash for each of the periods set forth below (in thousands):

Twenty-Six Weeks Ended

February 24, 2024 February 25, 2023

Thirty-Nine Weeks Ended

May 25, 2024 May 27, 2023

Net cash provided by operating activities

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Operating activities.

Our net cash provided by operating activities increased $40.6 million to $94.0 million for the twenty-six weeks ended February 24, 2024, compared to $53.3 million for the twenty-six weeks ended February 25, 2023.

The increase in cash provided by operating activities was primarily attributable to changes in working capital for the twenty-six weeks ended February 24, 2024, as compared to the twenty-six weeks ended February 25, 2023.

Changes in working capital, comprised of changes in accounts receivable, net, inventories, prepaid expenses, accounts payable, and accrued expenses and other current liabilities, which are driven by the timing of payments and receipts and seasonal building of inventory, consumed cash of $5.5 million in the twenty-six weeks ended February 24, 2024 compared to $36.2 million of cash consumed in the twenty-six weeks ended February 25, 2023, an improvement of $30.7 million.

In addition, income from operations increased by $4.9 million to $99.9 million for the twenty-six weeks ended February 24, 2024, as compared to $95.0 million for the twenty-six weeks ended February 25, 2023.

Additionally, cash paid for interest was $11.2

million in the twenty-six weeks ended February 24, 2024, which was a decrease of $3.1 million as compared to the $14.3 million paid for interest in the twenty-six weeks ended February 25, 2023.

In addition, cash paid for taxes decreased $0.9 million.

Our net cash provided by operating activities increased $56.3 million to $166.8 million for the thirty-nine weeks ended May 25, 2024, compared to $110.4 million for the thirty-nine weeks ended May 27, 2023.

The increase in cash provided by operating activities was primarily attributable to changes in working capital for the thirty-nine weeks ended May 25, 2024, as compared to the thirty-nine weeks ended May 27, 2023.

Changes in working capital, comprised of changes in accounts receivable, net, inventories, prepaid expenses, other current assets, accounts payable, accrued interest, accrued expenses and other current liabilities, and other assets and liabilities, which are driven by the timing of payments and receipts and seasonal building of inventory, generated cash of $6.8 million in the thirty-nine weeks ended May 25, 2024 compared to $31.6 million of cash consumed in the thirty-nine weeks ended May 27, 2023, an improvement of $38.4 million.

Income from operations increased by $9.5 million to $158.7 million for the thirty-nine weeks ended May 25, 2024, as compared to $149.2 million for the thirty-nine weeks ended May 27, 2023.

Additionally, cash paid for interest was $16.0 million in the thirty-nine weeks ended May 25, 2024, which was a decrease of $5.3 million as compared to the $21.3 million paid for interest in the thirty-nine weeks ended May 27, 2023.

Investing activities .

Our net cash used in investing activities was $1.3 million for the twenty-six weeks ended February 24, 2024 compared to $1.9 million for the twenty-six weeks ended February 25, 2023.

Our net cash used in investing activities for the twenty-six weeks ended February 24, 2024, primarily comprised $1.1 million of purchases of property and equipment.

The $1.9 million of net cash used in investing activities for the twenty-six weeks ended February 25, 2023, primarily comprised $1.7 million of purchases of property and equipment.

Our net cash used in investing activities was $2.3 million for the thirty-nine weeks ended May 25, 2024 compared to $10.4 million for the thirty-nine weeks ended May 27, 2023.

Our net cash used in investing activities for the thirty-nine weeks ended May 25, 2024, primarily comprised $1.8 million of purchases of property and equipment.

The $10.4 million of net cash used in investing activities for the thirty-nine weeks ended May 27, 2023, primarily comprised $10.1 million of purchases of property and equipment.

Financing activities .

Our net cash used in financing activities was $44.7 million for the twenty-six weeks ended February 24, 2024, compared to $55.7 million for the twenty-six weeks ended February 25, 2023.

Net cash used in financing activities for the twenty-six weeks ended February 24, 2024, primarily consisted of $45.0 million in principal payments on the Term Facility, and $3.8 million in tax payments related to issuance of restricted stock units and performance stock units, partially offset by $3.0 million of cash proceeds received from option exercises, and $1.2 million of cash proceeds received from the partial repayment of an outstanding note receivable.

Net cash used in financing activities for the twenty-six weeks ended February 25, 2023, primarily consisted of $16.4 million in repurchases of common stock, $41.5 million in principal payments on the Term Facility, and $2.4 million in tax payments related to issuance of restricted stock units and performance stock units, partially offset by $4.8 million of cash proceeds received from option exercises.

Our net cash used in financing activities was $43.6 million for the thirty-nine weeks ended May 25, 2024, compared to $98.6 million for the thirty-nine weeks ended May 27, 2023.

Net cash used in financing activities for the thirty-nine weeks ended May 25, 2024, primarily consisted of $45.0 million in principal payments on the Term Facility, and $4.8 million in tax payments related to issuance of restricted stock units and performance stock units, partially offset by $4.3 million of cash proceeds received from option exercises, and $2.1 million of cash proceeds received from the partial repayment of an outstanding note receivable.

Net cash used in financing activities for the thirty-nine weeks ended May 27, 2023, primarily consisted of $16.4 million in repurchases of common stock, $81.5 million in principal payments on the Term Facility, and $2.8 million in tax payments related to issuance of restricted stock units and performance stock units, partially offset by $5.0 million of cash proceeds received from option exercises.

New Accounting Pronouncements

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Quantitative and Qualitative Disclosures about Market Risk

There were no material changes in our market risk exposure during the thirteen-week period ended February 24, 2024.

There were no material changes in our market risk exposure during the thirteen-week period ended May 25, 2024.

For a discussion of our market risks, see “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of our Annual Report.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis