Simply Good Foods Co 10-K

Item 8. Financial Statements and Supplementary Data. TABLE OF CONTENTS Page Index to the Financial Statements Report of Independent Registered Public Accounting Firm 50 Consolidated Balance Sheets 52 Consolidated Statements of Income and Comprehensive Income 53 Consolidated Statements of Cash Flows 54 Consolidated Statements of Stockholders’ Equity 56 Notes to Consolidated Financial Statements Note 1. Nature of Operations and Principles of Consolidation 57 Note 2. Summary of Significant Accounting Policies 57 Note 3. Business Combination 63 Note 4 . Property and Equipment, Net 65 Note 5 . Goodwill and Intangibles 65 Note 6 . Accrued Expenses and Other Current Liabilities 67 Note 7 . Long-Term Debt and Line of Credit 67 Note 8 . Fair Value of Financial Instruments 69 Note 9 . Income Taxes 70 Note 10 . Leases 73 Note 1 1 . Commitments and Contingencies 74 Note 1 2 . Stockholder’s Equity 74 Note 1 3 . Earnings Per Share 75 Note 1 4 . Omnibus Incentive Plan 76 Note 1 5 . Segment and Customer Information 79 Note 1 6 . Restructuring and Related Charges 80 49 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of The Simply Good Foods Company Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of The Simply Good Foods Company and subsidiaries (the "Company") as of August 31, 2024, and August 26, 2023, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows, for the fifty-three weeks ended August 31, 2024, the fifty-two weeks ended August 26, 2023, and August 27, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2024, and August 26, 2023, and the results of its operations and its cash flows for each of the three years in the period ended August 31, 2024, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of August 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated October 29, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate. Revenue Recognition — Trade Promotions — Refer to Note 2 to the consolidated financial statements Critical Audit Matter Description The Company offers trade promotions through various programs to customers and consumers. Trade promotions include discounts, rebates, slotting, and other marketing activities. Trade promotions are recorded as a reduction to net sales with a corresponding reduction to accounts receivable at the time of revenue recognition for the underlying sale. The recognition of trade promotions requires the Company to make estimates regarding the volume of incentives that will be redeemed and their total cost. These estimates are made using various information including historical data on performance of similar trade promotional activities, and the Company's best estimates of current activity. We identified the allowance for trade promotions related to manufacturer charge-backs as a critical audit matter because management’s estimate of the expected future promotional claims is subjective and requires a high degree of judgment. Auditing management’s assumptions and judgments used in determining the allowance for trade promotions related to manufacturer charge-backs as of August 31, 2024, required a high degree of auditor judgment and an increased extent of effort. 50 How the Critical Audit Matter Was Addressed in the Audit Our auditing procedures over the allowance for trade promotions related to manufacturer charge-backs included the following, among others: • We tested the design, implementation and operating effectiveness of internal controls over the allowance for trade promotions. • For a selection of allowances for trade promotions recorded as of August 31, 2024, we: ◦ Confirmed contract terms directly with the customer. ◦ Agreed contract terms from the accounting records to the promotion agreement with the customer and verified the promotion period was prior to September 1, 2024. ◦ Evaluated the appropriateness of the year-end trade accrual estimate using historical data on performance of similar trade promotional activities and subsequent customer activity. • We evaluated management’s ability to estimate promotional claims incurred, but not yet received for potential management bias by comparing historical promotional claims received to management’s estimates of the claims to be received. • For a selection of customer promotional claims unresolved as of August 31, 2024, we compared that amount to the August 31, 2024, allowance for promotions balance and traced the resolved deduction to an approved trade promotion. • For a selection of customer promotional claims resolved after August 31, 2024, we compared that amount to the August 31, 2024, allowance for promotions balance and traced the resolved deduction to an approved trade promotion. Business Combination - Only What You Need, Inc. - Valuation of Brand Intangible Asset - Refer to Note 3 to the consolidated financial statements Critical Audit Matter Description The Company completed the acquisition of Only What You Need, Inc. (“OWYN”) for approximately $280 million on June 13, 2024. The Company accounted for the acquisition under the acquisition method of accounting for business combinations. Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including the indefinite lived brand intangible asset of $223 million. The fair value of the indefinite lived brand intangible asset was estimated using the multi-period excess earnings method of the income approach, wherein the net earnings attributable to the asset are isolated from “contributory” assets in order to estimate the cash flows solely attributable to the asset over its remaining economic life. Given the fair value determination of the indefinite lived brand intangible asset for Only What You Need, Inc. requires management to make significant estimates and assumptions related to the selection of the long-term growth rate and discount rate, performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgement and an increased extent of effort, including the need to involve our fair value specialists. How the Critical Audit Matter Was Addressed in the Audit Our auditing procedures related to the selection of long-term growth rate and discount rate included the following, among others: • We tested the design, implementation and operating effectiveness of internal controls related to the Company’s assumptions related to the selection of the long-term growth rate and discount rate. • We obtained an understanding of management’s key assumptions in developing the long-term growth rate and discount rate. • With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodologies and the selection of the long-term growth rate and discount rate by: ◦ Testing the source information underlying the determination of the long-term growth rate and comparing the significant assumptions used by management to current industry and economic trends. ◦ Testing the source information underlying the determination of the discount rate and testing the mathematical accuracy of the calculation. ◦ Developing a range of independent estimates and comparing those to the discount rate selected by management. /s/ Deloitte & Touche LLP Denver, Colorado October 29, 2024 We have served as the Company’s auditor since 2019. 51 Table of Contents The Simply Good Foods Company and Subsidiaries Consolidated Balance Sheets (In thousands, except share data) August 31, 2024 August 26, 2023 Assets Current assets: Cash $ 132,530 $ 87,715 Accounts receivable, net 150,721 145,078 Inventories 142,107 116,591 Prepaid expenses 5,730 6,294 Other current assets 9,192 15,974 Total current assets 440,280 371,652 Long-term assets: Property and equipment, net 24,830 24,861 Intangible assets, net 1,336,466 1,108,119 Goodwill 591,687 543,134 Other long-term assets 42,881 49,318 Total assets $ 2,436,144 $ 2,097,084 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 58,559 $ 52,712 Accrued interest 265 1,940 Accrued expenses and other current liabilities 49,791 35,062 Current maturities of long-term debt — 143 Total current liabilities 108,615 89,857 Long-term liabilities: Long-term debt, less current maturities 397,485 281,649 Deferred income taxes 166,012 116,133 Other long-term liabilities 36,546 38,346 Total liabilities 708,658 525,985 See commitments and contingencies (Note 11) Stockholders’ equity: Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued — — Common stock, $0.01 par value, 600,000,000 shares authorized, 102,515,315 and 101,929,868 issued at August 31, 2024 and August 26, 2023, respectively 1,025 1,019 Treasury stock, 2,365,100 shares and 2,365,100 shares at cost at August 31, 2024 and August 26, 2023, respectively ( 78,451 ) ( 78,451 ) Additional paid-in-capital 1,319,686 1,303,168 Retained earnings 487,265 347,956 Accumulated other comprehensive loss ( 2,039 ) ( 2,593 ) Total stockholders’ equity 1,727,486 1,571,099 Total liabilities and stockholders’ equity $ 2,436,144 $ 2,097,084 See accompanying Notes to the Consolidated Financial Statements 52 Table of Contents The Simply Good Foods Company and Subsidiaries Consolidated Statements of Income and Comprehensive Income (In thousands, except share and per share data) 53-Weeks Ended 52-Weeks Ended 52-Weeks Ended August 31, 2024 August 26, 2023 August 27, 2022 Net sales $ 1,331,321 $ 1,242,672 $ 1,168,678 Cost of goods sold 819,755 789,252 723,117 Gross profit 511,566 453,420 445,561 Operating expenses: Selling and marketing 143,929 119,489 121,685 General and administrative 129,699 111,566 103,832 Depreciation and amortization 16,917 17,416 17,285 Business transaction costs 14,524 — — Total operating expenses 305,069 248,471 242,802 Income from operations 206,497 204,949 202,759 Other income (expense): Interest income 4,307 1,144 15 Interest expense ( 26,029 ) ( 30,068 ) ( 21,881 ) (Loss) in fair value change of warrant liability — — ( 30,062 ) Gain (loss) on foreign currency transactions 267 ( 344 ) 191 Other income (expense) 1,008 11 ( 453 ) Total other income (expense) ( 20,447 ) ( 29,257 ) ( 52,190 ) Income before income taxes 186,050 175,692 150,569 Income tax expense 46,741 42,117 41,995 Net income $ 139,309 $ 133,575 $ 108,574 Other comprehensive income: Foreign currency translation, net of reclassification adjustments 554 ( 642 ) ( 1,133 ) Comprehensive income $ 139,863 $ 132,933 $ 107,441 Earnings per share: Basic $ 1.39 $ 1.34 $ 1.10 Diluted $ 1.38 $ 1.32 $ 1.08 Weighted average shares outstanding: Basic 99,929,196 99,442,046 98,754,913 Diluted 101,281,888 100,880,079 100,589,156 See accompanying Notes to the Consolidated Financial Statements 53 Table of Contents The Simply Good Foods Company and Subsidiaries Consolidated Statements of Cash Flows (In thousands) 53-Weeks Ended 52-Weeks Ended 52-Weeks Ended August 31, 2024 August 26, 2023 August 27, 2022 Operating activities Net income $ 139,309 $ 133,575 $ 108,574 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 20,993 20,253 19,299 Amortization of deferred financing costs and debt discount 2,037 2,763 2,559 Stock compensation expense 18,421 14,480 11,697 Loss in fair value change of warrant liability — — 30,062 Estimated credit (recoveries) losses ( 150 ) 315 601 Unrealized (gain) loss on foreign currency transactions ( 267 ) 344 ( 191 ) Deferred income taxes 8,366 10,590 11,789 Amortization of operating lease right-of-use asset 6,991 6,729 6,620 Gain on lease termination — — ( 30 ) Other 988 567 681 Changes in operating assets and liabilities: Accounts receivable, net 9,129 ( 13,374 ) ( 21,796 ) Inventories 13,726 8,169 ( 29,508 ) Prepaid expenses 1,164 ( 1,306 ) ( 138 ) Other current assets 4,957 6,837 ( 11,739 ) Accounts payable ( 15,450 ) ( 9,510 ) 2,878 Accrued interest ( 1,675 ) 1,780 100 Accrued expenses and other current liabilities 12,730 ( 5,223 ) ( 15,283 ) Other assets and liabilities ( 5,565 ) ( 5,872 ) ( 5,536 ) Net cash provided by operating activities 215,704 171,117 110,639 Investing activities Purchases of property and equipment ( 5,743 ) ( 11,585 ) ( 5,232 ) Issuance of note receivable — — ( 2,400 ) Acquisition of business, net of cash acquired ( 280,409 ) — — Investments in intangible assets and other assets ( 730 ) ( 603 ) ( 524 ) Net cash used in investing activities ( 286,882 ) ( 12,188 ) ( 8,156 ) Financing activities Proceeds from option exercises 4,293 5,247 4,343 Tax payments related to issuance of restricted stock units ( 5,048 ) ( 2,859 ) ( 3,660 ) Repurchase of common stock — ( 16,448 ) ( 59,858 ) Payments on finance lease obligations ( 145 ) ( 278 ) ( 313 ) Principal payments of long-term debt ( 135,000 ) ( 121,500 ) ( 50,000 ) Proceeds from issuance of long-term debt 250,000 — — Cash received on repayment of note receivable 3,000 — — Deferred financing costs ( 1,199 ) ( 2,694 ) ( 544 ) Net cash provided by (used in) financing activities 115,901 ( 138,532 ) ( 110,032 ) Net increase (decrease) in cash 44,723 20,397 ( 7,549 ) Effect of exchange rate on cash 92 ( 176 ) ( 302 ) Cash at beginning of period 87,715 67,494 75,345 Cash at end of period $ 132,530 $ 87,715 $ 67,494 54 Table of Contents 53-Weeks Ended 52-Weeks Ended 52-Weeks Ended August 31, 2024 August 26, 2023 August 27, 2022 Supplemental disclosures of cash flow information Cash paid for interest $ 25,667 $ 25,511 $ 19,222 Cash paid for taxes $ 33,245 $ 27,411 $ 49,181 Non-cash investing and financing transactions Non-cash additions to property and equipment $ 191 $ 178 $ 743 Non-cash additions to intangible assets and other assets $ 116 $ 26 $ 86 Issuance of common stock in extinguishment of warrant liabilities $ — $ — $ 189,897 Operating lease right-of-use assets recognized in exchange for lease liabilities $ 2,066 $ 289 $ 6,872 Non-cash credits for repayment of note receivable $ 740 $ 395 $ — See accompanying Notes to the Consolidated Financial Statements 55 Table of Contents The Simply Good Foods Company and Subsidiaries Consolidated Statements of Stockholders’ Equity (In thousands, except share data) Common Stock Treasury Stock Additional Paid in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Total Shares Amount Shares Amount Balance, August 28, 2021 95,882,908 $ 959 98,234 $ ( 2,145 ) $ 1,085,001 $ 105,807 $ ( 818 ) $ 1,188,804 Net income — — — — — 108,574 — 108,574 Stock-based compensation — — — — 11,697 — — 11,697 Foreign currency translation adjustments — — — — — — 14 14 Reclassification adjustment for currency translation gains related to the liquidation of foreign entities — — — — — — ( 1,147 ) ( 1,147 ) Repurchase of common stock — — 1,720,520 ( 59,858 ) — — — ( 59,858 ) Warrant conversion 4,830,761 48 — — 189,849 — — 189,897 Shares issued upon vesting of restricted stock units 256,374 3 — — ( 3,663 ) — — ( 3,660 ) Exercise of options to purchase common stock 352,791 3 — — 4,340 — — 4,343 Balance, August 27, 2022 101,322,834 $ 1,013 1,818,754 $ ( 62,003 ) $ 1,287,224 $ 214,381 $ ( 1,951 ) $ 1,438,664 Net income — — — — — 133,575 — 133,575 Stock-based compensation — — — — 13,562 — — 13,562 Foreign currency translation adjustments — — — — — — ( 642 ) ( 642 ) Repurchase of common stock — — 546,346 ( 16,448 ) — — — ( 16,448 ) Shares issued upon vesting of restricted stock units 210,718 2 — — ( 2,861 ) — — ( 2,859 ) Exercise of options to purchase common stock 396,316 4 — — 5,243 — — 5,247 Balance, August 26, 2023 101,929,868 $ 1,019 2,365,100 $ ( 78,451 ) $ 1,303,168 $ 347,956 $ ( 2,593 ) $ 1,571,099 Net income — — — — — 139,309 — 139,309 Stock-based compensation — — — — 17,279 — — 17,279 Foreign currency translation adjustments — — — — — — 554 554 Shares issued upon vesting of restricted stock units 328,568 3 — — ( 5,051 ) — — ( 5,048 ) Exercise of options to purchase common stock 256,879 3 — — 4,290 — — 4,293 Balance, August 31, 2024 102,515,315 $ 1,025 2,365,100 $ ( 78,451 ) $ 1,319,686 $ 487,265 $ ( 2,039 ) $ 1,727,486 See accompanying Notes to the Consolidated Financial Statements 56 Table of Contents Notes to Consolidated Financial Statements (In thousands, except for share and per share data) 1. Nature of Operations and Principles of Consolidation 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, 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 Quest, Atkins, and OWYN 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. On April 29, 2024, the Company entered into a stock purchase agreement (the “Purchase Agreement”) to acquire Only What You Need, Inc. (“OWYN”), a plant-based protein food company (the “OWYN Acquisition”), for approximately $ 280.0 million. On June 13, 2024, pursuant to the Purchase Agreement, the Company completed the OWYN Acquisition by acquiring 100% of the equity interests for a cash purchase price at closing of $ 281.9 million, subject to certain customary post-closing adjustments. 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: 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 plant-based alternatives. 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. The Company’s portfolio of nutritious snacking brands gives it a strong platform with which to introduce new products, expand distribution, and attract new consumers to its products. The common stock of Simply Good Foods is listed on the Nasdaq Capital Market under the symbol “SMPL.” Basis of Presentation The consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The Company maintains its accounting records on a 52/53-week fiscal year, ending on the last Saturday in August. The financial information presented within the Company’s consolidated financial statements has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The accompanying financial statements include Consolidated Balance Sheets for the periods ended August 31, 2024, and August 26, 2023. The remaining financial statements include the fifty-three weeks ended August 31, 2024, the fifty-two weeks ended August 26, 2023, and the fifty-two weeks ended August 27, 2022. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. Unless the context otherwise requires, “we,” “us,” “our” and the “Company” refer to Simply Good Foods and its subsidiaries on a consolidated basis. 2. Summary of Significant Accounting Policies Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Estimates also affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Business Combination On June 13, 2024, pursuant to the Purchase Agreement, the Company completed the OWYN Acquisition by acquiring 100% of the equity interests for a cash purchase price at closing of $ 281.9 million, subject to certain customary post-closing adjustments. The OWYN Acquisition was accounted for using the acquisition method of accounting prescribed by Accounting Standard Codification ("ASC") Topic 805, Business Combinations (“ASC 805”), whereby the results of operations, including the revenues and earnings of OWYN, are included in the financial statements from the date of acquisition. Additionally, assets acquired and liabilities assumed were recognized at their fair values based on widely accepted valuation techniques in accordance with ASC Topic 820, Fair Value Measurements, as of the closing date. The process for estimating fair values requires the use of significant estimates, assumptions and judgments, including determining the timing and estimates of 57 Table of Contents future cash flows and developing appropriate discount rates. ASC 805 establishes a measurement period to provide the Company with a reasonable amount of time to obtain the information necessary to identify and measure various items in a business combination and cannot extend beyond one year from the acquisition date. Measurement period adjustments are recognized in the reporting period in which the adjustments are determined and calculated as if the accounting had been completed as of the acquisition date. The Company expects to complete the final fair value determination of the assets acquired and liabilities assumed as soon as practicable within the measurement period, but not to exceed one year from the acquisition date. Fair Value Measurements Fair value represents the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Assets and liabilities are valued based upon observable and non-observable inputs. Valuations using Level 1 inputs are based on unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date. Level 2 inputs utilize significant other observable inputs available at the measurement date, other than quoted prices included in Level 1. Valuations using Level 3 inputs are based on significant unobservable inputs that cannot be corroborated by observable market data and require significant judgment. There were no significant transfers between levels during any period presented. Cash Cash consists of cash on hand, deposits available on demand and other short-term, highly liquid investments with original maturities of three months or less. Accounts Receivable, Net and Expected Credit Losses Accounts receivable, net consists primarily of trade receivables, net of allowances for doubtful accounts, returns, and trade promotions. The Company sells its products for cash or on credit terms, which are established in accordance with local and industry practices and typically require payment within 30 days of delivery and may allow discounts for early payment. The Company estimates its allowance for doubtful accounts and the related expected credit loss based upon the Company’s historical credit loss experience, adjusted for asset-specific risk characteristics, current economic conditions, and reasonable forecasts. Accounts receivable are written off when determined to be uncollectible. Charges related to credit (recoveries) losses on accounts receivables from transactions with external customers were approximately $( 0.1 ) million, $ 0.7 million, and $ 0.1 million for the fifty-three weeks ended August 31, 2024, the fifty-two weeks ended August 26, 2023, and August 27, 2022, respectively. As of August 31, 2024, and August 26, 2023, the allowance for doubtful accounts was $ 0.7 million and $ 1.9 million, respectively. Inventories Inventories are valued at the lower of cost or net realizable value on a first-in, first-out basis, adjusted for the value of inventory that is determined to be excess, obsolete, expired or unsaleable. Obsolete inventory is reserved at 50 % for inventory four to six months from expiration, and 100 % for items within three months of expiration. Reserves are also taken for certain products or packaging materials when it is determined their cost may not be recoverable. Inventories, as presented with the Consolidated Balance Sheets, is summarized as follows: (In thousands) August 31, 2024 August 26, 2023 Finished goods $ 120,914 $ 111,761 Raw materials 22,940 6,512 Reserve for obsolete inventory ( 1,747 ) ( 1,682 ) Total inventories $ 142,107 $ 116,591 58 Table of Contents Property and Equipment, Net Property and equipment, net is stated at the allocated fair value for acquired assets. Additions to property and equipment are recorded at cost and depreciated on a straight-line basis over their estimated useful lives. The general ranges of estimated useful lives are: Furniture and fixtures 7 years Computer equipment, software and website development costs 3 - 5 years Machinery and equipment 5 - 7 years Office equipment 3 - 5 years Leasehold improvements are amortized over the shorter of the remaining term of the lease or the useful life of the improvement utilizing the straight-line method. The Company performs impairment tests for Property and equipment, net when circumstances indicate that the carrying value of the asset may not be recoverable. There were no indicators of impairment in the fifty-three weeks ended August 31, 2024, August 26, 2023, or August 27, 2022. Goodwill and Intangible Assets, Net Goodwill and Intangible assets, net result primarily from the consummation of the business combination between Conyers Park Acquisition Corp. and NCP-ATK Holdings, Inc. on July 7, 2017, which created the Company, and the acquisitions of Quest and OWYN. Intangible assets primarily includes brands and trademarks with indefinite lives and customer-related relationships with finite lives. Upon acquisition, the purchase price is first allocated to identifiable assets and liabilities, including customer-related intangible assets and trademarks, with any remaining purchase price recorded as Goodwill . Goodwill and indefinite-lived intangible assets are not amortized but instead are tested for impairment at least annually, or more frequently if indicators of impairment exist. The Company conducts its annual impairment tests at the beginning of the fourth fiscal quarter. Goodwill and indefinite-lived intangible assets are assessed using either a qualitative or quantitative approach to determine whether it is more likely than not that the fair value of a reporting unit or an indefinite-lived intangible asset is less than its carrying amount. The qualitative assessment evaluates factors including macro-economic conditions, industry-specific and company-specific considerations, legal and regulatory environments, and historical performance. If the Company determines that it is more likely than not that the fair value of a reporting unit or an indefinite-lived intangible asset is less than its carrying value, a quantitative assessment is performed. Otherwise, no further assessment is required. The quantitative approach compares the estimated fair value of the reporting unit, including goodwill, or the indefinite-lived intangible asset to its carrying amount. Impairment is indicated if the estimated fair value of the reporting unit or indefinite-lived intangible asset is less than the carrying amount, and an impairment charge is recognized for the differential. During the third quarter of the fiscal year ended August 31, 2024, the Company conducted a qualitative impairment assessment in the fiscal third quarter that identified potential indicators of impairment for the Atkins brand indefinite lived intangible asset. Accordingly, the Company proceeded to conduct a quantitative impairment assessment over the asset. Based on our testing, the asset had an excess fair value well over its respective carrying value, resulting in no impairment. During the fifty-three weeks ended August 31, 2024, the Company performed qualitative impairment assessments for its indefinite-lived intangible assets as of the first day of the fourth fiscal quarter. The qualitative assessment did not identify indicators of impairment, and it was determined that it was more likely than not each indefinite-lived intangible asset had fair values in excess of their carrying values. Accordingly, no further impairment assessments were necessary. There were no impairment charges related to indefinite-lived intangibles recognized in the fifty-three weeks ended August 31, 2024, August 26, 2023, or August 27, 2022, respectively. Refer to Note 5, Goodwill and Intangibles for additional information regarding the Company’s reporting units and impairment assessments. Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives. The Company reviews for impairment indicators of finite-lived intangibles and other long-lived assets as described in the “Property and Equipment, Net” significant accounting policy. Deferred Financing Costs and Debt Discounts Costs incurred in obtaining long-term financing paid to parties other than creditors are considered a deferred financing cost, which are presented net against Long-term debt, less current maturities on the balance sheet, and are amortized over the terms of the long-term financing agreements using the effective-interest method.. Amounts paid to creditors are recorded as a reduction in the proceeds received by the creditor and are considered a discount on the issuance of debt. 59 Table of Contents Income Taxes Income taxes include federal, state and foreign taxes currently payable, and deferred taxes arising from temporary differences between income for financial reporting and income tax purposes. Deferred tax assets and liabilities are determined based on the differences between the financial statement balances and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the fiscal year that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to amounts expected to be realized. Leases Contracts are evaluated to determine whether they contain a lease at inception. Leases are classified as either finance leases or operating leases based on criteria in ASC Topic 842, Leases. The Company’s operating leases are generally comprised of real estate and certain equipment used in warehousing products. The Company’s finance leases are generally comprised of warehouse equipment. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The majority of the Company’s leases do not provide an implicit rate; therefore, the Company uses its secured incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments for those leases. The Company’s incremental borrowing rate for a lease is the rate of interest it would pay to borrow on a collateralized basis over a similar term to the lease in a similar economic environment. The Company applied incremental borrowing rates using a portfolio approach. Right-of-use assets also include any lease payments made and exclude lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term operating leases that have a term of one year or less. The Company monitors for triggering events or conditions that require a reassessment of its leases. When the reassessment requires a re-measurement of the lease liability, a corresponding adjustment is made to the carrying amount of the right-of-use asset. Additionally, the Company reviewed for impairment indicators of its right-of-use assets and other long-lived assets as described in the “Property and Equipment, Net” significant accounting policy. Warrant Accounting The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued private placement stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC Topic 480, Distinguishing Liabilities from Equity, and ASC Topic 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity (“ASC 815-40”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is assessed as part of this evaluation. During the fifty-two weeks ended August 27, 2022, the Company had outstanding liability-classified private warrants that allowed holders to purchase 6,700,000 shares of the Company’s common stock (the “Private Warrants”). Such Private Warrants were held by Conyers Park Sponsor, LLC (“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 in full 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 August 31, 2024, or August 26, 2023. During the reporting periods the Private Warrants were outstanding, they were precluded from equity classification, being liability-classified. The Company accounted for these Private Warrants as a derivative warrant liability in accordance with ASC 815-40. Accordingly, the Company recognized the Private Warrants as a liability at fair value and adjusted the Private Warrants to fair value at each reporting period through other income. The fair value adjustments were determined using a Black-Scholes option-pricing methodology (“Black-Scholes model”). The valuation was primarily based on observable market data while the related theoretical private warrant volatility assumption within the Black-Scholes model represented a Level 3 measurement within the fair value measurement hierarchy. The periodic remeasurement of the Private Warrants was reflected in (Loss) in fair value change of warrant liability within the Consolidated Statements of Income and Comprehensive Income. Revenue Recognition The Company recognizes revenue when performance obligations under the terms of a contract with its customer are satisfied. The Company has determined that fulfilling and delivering products is a single performance obligation. Revenue is recognized at the point in time when the Company has satisfied its performance obligation and the customer has obtained control of the products. This generally occurs when the product is delivered to or picked up by the customer based on applicable shipping terms, which is typically within 30 days. Revenue is measured as the amount of consideration expected to be received in exchange for fulfilled product orders, including 60 Table of Contents estimates of variable consideration. The most common forms of variable consideration include trade promotions, such as consumer incentives, coupon redemptions and other marketing activities, allowances for unsaleable product, and any additional amounts where a distinct good or service cannot be identified or the value cannot be reasonably estimated. Trade promotions are recorded as a reduction to net sales with a corresponding reduction to accounts receivable at the time of revenue recognition for the underlying sale. The recognition of trade promotions requires management to make estimates regarding the volume of incentive that will be redeemed and their total cost. As of August 31, 2024, and August 26, 2023, the allowance for trade promotions was $ 36.3 million and $ 28.8 million, respectively. Estimates of variable consideration are made using various information including historical data on performance of similar trade promotional activities, market data from IRI, and the Company’s best estimate of current activity. The Company reviews these estimates regularly and makes revisions as necessary. Revisions can include changes for consideration paid to customers that lack sufficient evidence to support a distinct good or service assertion, or for which a reasonably estimable fair value cannot be determined, primarily related to the Company’s assessments of cooperative advertising programs. Uncertainties related to the estimate of variable consideration are resolved in a short time frame and do not require any additional constraint on variable consideration. Adjustments to variable consideration are recognized in the period the adjustments are identified and have historically been insignificant. Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities. The Company provides standard assurance type warranties that its products will comply with all agreed-upon specifications. No services beyond an assurance type warranty are provided to customers. While customers generally have a right to return defective or non-conforming products, past experience has demonstrated that product returns have been immaterial. Customer remedies for defective or non-conforming products may include a refund or exchange. As a result, the right of return is estimated and recorded as a reduction in revenue at the time of sale, if necessary. The Company’s customer contracts identify product quantity, price and payment terms. Payment terms are granted consistent with industry standards. Although some payment terms may be more extended, the majority of the Company’s payment terms are less than 60 days. As a result, revenue is not adjusted for the effects of a significant financing component. Amounts billed and due from customers are classified as Accounts receivable, net on the Consolidated Balance Sheets. The Company utilizes third-party contract manufacturers for the manufacture of its products. The Company has evaluated whether it is the principal or agent in these relationships. The Company has determined that it is the principal in all cases, as it retains the responsibility for fulfillment and risk of loss, as well as establishes the price. In accordance with ASC Topic 606, Revenue from Contracts with Customers, the Company has elected the practical expedient to expense the incremental costs to obtain a contract, because the amortization period would be less than one year, and the practical expedient for shipping and handling costs. Shipping and handling costs incurred to deliver products to customers are accounted for as fulfillment activities, rather than a promised service, and as such are included in Cost of goods sold in the Consolidated Statements of Income and Comprehensive Income. Revenues 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. For revenue disaggregated by geographic area and brand refer to Note 15, Segment and Customer Information. Cost of Goods Sold Costs of goods sold represent costs directly related to the manufacture and distribution of the Company’s products. Such costs include raw materials, co-manufacturing costs, packaging, shipping and handling, third-party distribution, and depreciation of distribution center equipment and leasehold improvements. Shipping and Handling Costs Shipping and handling costs include costs paid to third-party warehouse operators associated with delivering product to customers and depreciation and amortization of company-owned assets at the third-party warehouse. Shipping and handling costs are recognized in Cost of goods sold . Costs relating to products shipped to customers were $ 93.5 million, $ 89.2 million, and $ 91.7 million for the fifty-three weeks ended August 31, 2024, and the fifty-two weeks ended August 26, 2023, and August 27, 2022, respectively. 61 Table of Contents Advertising Costs Production costs related to television commercials are expensed when first aired. All other advertising costs are expensed when incurred or when the advertising service is received through Selling and marketing . Total advertising costs were $ 103.0 million, $ 79.2 million, and $ 84.3 million for the fifty-three weeks ended August 31, 2024, and the fifty-two weeks ended August 26, 2023, and August 27, 2022, respectively. Production costs related to television commercials not yet aired and prepaid advertising services not yet received are included in Prepaid expenses in the accompanying Consolidated Balance Sheets. As of August 31, 2024, and August 26, 2023, total prepaid advertising expenses were $ 1.0 million and $ 1.8 million, respectively. Research and Development Activities The Company’s research and development activities primarily consist of generating and testing new product concepts, new flavors and packaging. The Company expenses research and development costs as incurred related to compensation, facility costs, consulting, and supplies. Research and development activities are primarily internal and associated costs are included in General and administrative . The Company’s total research and development expenses were $ 5.4 million, $ 4.3 million, and $ 4.1 million for the fifty-three weeks ended August 31, 2024, and the fifty-two weeks ended August 26, 2023, and August 27, 2022, respectively. Share-Based Compensation The Company uses share-based compensation, including stock options, restricted stock units, performance stock units, and stock appreciation rights, to provide long-term performance incentives for its employees, directors, and consultants. Share-based compensation is recognized on a straight-line basis over the requisite service period of the award based on their grant-date fair value. Forfeitures are recognized as they occur. Employee related Share-based compensation expense is included in General and administrative, while Share-based compensation expense related to non-employee consultants of the Company is recorded in Selling and marketing. Defined Contribution Plan The Company sponsors defined contribution plans to provide retirement benefits to its employees. The Company’s 401(k) plan and similar plans for non-domestic employees are based on a portion of eligible pay up to a defined maximum. All matching contributions are made in cash. Expense associated with defined contribution plans was $ 1.6 million, $ 1.4 million, and $ 1.1 million for the fifty-three weeks ended August 31, 2024, and the fifty-two weeks ended August 26, 2023, and August 27, 2022, respectively. Foreign Currency Translation For all foreign operations, the functional currency is the local currency. Assets and liabilities of these operations are translated into U.S. dollars using the exchange rate in effect at the end of each reporting period. Income statement accounts are translated at the average exchange rate prevailing during each reporting period. Translation adjustments are recorded as a component of Other comprehensive income . Gains or losses resulting from transactions in foreign currencies are included in Other income (expense) . Recently Issued and Adopted Accounting Pronouncements 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 (“ASU 2020-04”), which provides optional guidance for a limited period of time to ease the potential burden in accounting for reference rate reform on financial reporting. Additionally, in December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848), Deferral of the Sunset Date of Topic 848, which extended the period of time for which ASU 2020-04 could be applied. 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. 62 Table of Contents 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 7, Long-Term Debt and Line of Credit. In addition to replacing the London Interbank Offered Rate (“LIBOR”) as the Credit Agreement’s reference rate with the Secured Overnight Financing Rate (“SOFR”), the 2022 Repricing Amendment contemporaneously modified other terms that changed, or had the potential to change, the amount or timing of contractual cash flows as contemplated by the guidance in ASU 2020-04. As such, the contract modifications related to the 2022 Repricing Amendment were outside of the scope of the optional guidance in ASU 2020-04. The Company will continue to monitor the effects of rate reform, if any, on any new or amended contracts through December 31, 2024. The Company does not anticipate the amendments in this ASU will be material to its consolidated financial statements. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), 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. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures (“ASU 2023-09”), which updates disclosures required in the footnotes to the financial statements to further aid investors in understanding how to analyze income tax reporting. The amendments are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available. The amendments should be applied on a prospective basis, however, retrospective application is permitted. 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. 3. Business Combination On April 29, 2024 , the Company’s wholly owned subsidiary, Simply Good Foods, USA, Inc. entered into a stock purchase agreement (the “Purchase Agreement”) to acquire Only What You Need, Inc. (“OWYN”), a plant-based protein food company (the “OWYN Acquisition”), for approximately $ 280.0 million. On June 13, 2024, pursuant to the Purchase Agreement, the Company completed the OWYN Acquisition by acquiring 100% of the equity interests for a cash purchase price at closing of $ 281.9 million, subject to certain customary post-closing adjustments. We acquired OWYN as a part of our vision 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 that will now offer plant-based products to a wider market of consumers. The OWYN Acquisition was funded through a combination of incremental borrowings under our outstanding Term Facility, totaling $ 250.0 million, and cash on hand. Business transaction costs within the Consolidated Statements of Income and Comprehensive Income for the fifty-three weeks ended August 31, 2024 were $ 14.5 million, inclusive of $ 5.7 million of transaction advisory fees related to the OWYN Acquisition, $ 3.4 million of non-deferrable third-party financing costs incurred in connection with the 2024 Incremental Facility Amendment to the Credit Agreement, and $ 5.4 million of legal, due diligence, accounting, and other costs. The OWYN Acquisition was accounted for as a business combination under ASC 805, Business Combinations (“ASC 805”) which requires, among other things, assets acquired and liabilities assumed to be measured at their acquisition date fair value. The following table sets forth the preliminary purchase price allocation of the OWYN Acquisition to the estimated fair value of the net assets acquired at the date of the Acquisition, in thousands. The preliminary purchase price allocation may be adjusted as a result of the finalization of the Company’s purchase price allocation procedures related to the assets acquired and liabilities assumed ; including, but not limited to, certain customary post-closing adjustments such as the finalization of working capital, tax return finalization, and other adjustments. 63 Table of Contents The preliminary June 13, 2024, fair value is as follows: Assets acquired: Cash and cash equivalents $ 1,476 Accounts receivable, net 14,214 Inventories (1) 38,955 Prepaid assets 563 Property and equipment, net 136 Intangible assets, net (2) 243,626 Other long-term assets 6 Liabilities assumed: Accounts payable 20,378 Other current liabilities 3,753 Deferred tax liability (3) 41,513 Total identifiable net assets 233,332 Goodwill (4) 48,553 Total assets acquired and liabilities assumed $ 281,885 (1) Inventory was estimated using the comparative sales method, which quantifies the fair value of inventory based on the expected sales price of the subject inventory, reduced for: (i) all costs expected to be incurred in its completion/disposition efforts and (ii) a profit on those costs. (2) Intangible assets were recorded at fair value consistent with ASC 820 as a result of the OWYN Acquisition. Intangible assets consist of $ 223.0 million of brand and $ 20.5 million of customer relationships. The useful lives of the intangible assets are disclosed in Note 5 of the Consolidated Financial Statements. The fair value measurement of the assets and liabilities was based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value measurement hierarchy. Level 3 fair market values were determined using a variety of information, including estimated future cash flows and market comparable data and companies. The fair value of the indefinite-lived brand asset was estimated using the multi-period excess earnings method of the income approach, wherein the net earnings attributable to the asset are isolated from other “contributory assets” in order to estimate the cash flows solely attributable to the asset over its remaining economic life. The fair value of the customer relationship intangible asset was estimated using the with/without method of the income approach, wherein the value is estimated by comparing the overall business cash flows with the customer relationships in place to the cash flows in a hypothetical scenario where the customer relationships are not in place. The significant assumptions used in estimating the fair value under the with/without method include the time to recreate the asset, profitability under both scenarios, and the estimated discount rate. (3) Primarily as a result of the fair value attributable to the identifiable intangible assets, the deferred income tax liability was $ 41.5 million. (4) Goodwill was recorded at fair value consistent with ASC 820 as a result of the OWYN Acquisition. Amounts recorded for goodwill created in an acquisition structured as a stock purchase for tax are generally not expected to be deductible for tax purposes. As such, the acquired goodwill is not expected to be deductible for tax purposes. Goodwill represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The final determination of the fair value of the assets acquired and liabilities assumed is expected to be completed in the fourth fiscal quarter of 2025. Measurement period adjustments are recognized in the reporting period in which the adjustments are determined and calculated as if the accounting had been completed at the acquisition date. The final fair value determination of the assets acquired and liabilities assumed will be completed prior to one year from the transaction completion, consistent with ASC 805. The results of OWYN’s operations have been included in the Simply Good Foods' Consolidated Financial Statements since the acquisition date. The Company has not disclosed earnings from the acquired OWYN business as they are immaterial. The following table provides net sales from the acquired OWYN business included in the Company's results: 64 Table of Contents 53-Weeks Ended (In thousands) August 31, 2024 Net sales $ 29,213 Unaudited Pro Forma Financial Information Pro forma financial information is not intended to represent or be indicative of the actual results of operations of the combined business that would have been reported had the OWYN Acquisition been completed at the beginning of the fiscal year 2023, nor is it representative of future operating results of the Company. This unaudited pro forma combined financial information is prepared based on ASC 805 period end guidance. The Company and the legacy OWYN entity have different fiscal year ends, with Simply Good Foods’ fiscal year being the last Saturday of August while the legacy OWYN business fiscal year end was December 31. Because the year ends differ by more than 93 days, OWYN's financial information is required to be adjusted to a period within 93 days of Simply Good Foods’ fiscal period end. In addition to these period end adjustments, the pro forma results include certain nonrecurring adjustments that were directly related to the business combination, including business transaction costs, as disclosed above. The following unaudited pro forma combined financial information presents combined results of the Company assuming the OWYN Acquisition occurred at the beginning of fiscal year 2023: 53-Weeks Ended 52-Weeks Ended (In thousands) August 31, 2024 August 26, 2023 Net Sales $ 1,414,580 $ 1,303,643 Net income $ 136,220 $ 97,693 4. Property and Equipment, Net Property and equipment, net , as presented with the Consolidated Balance Sheets, is summarized as follows: (In thousands) August 31, 2024 August 26, 2023 Furniture and fixtures $ 7,463 $ 7,291 Computer equipment and software 1,869 1,570 Machinery and equipment 17,803 16,944 Leasehold improvements 10,632 9,747 Finance lease right-of-use-assets — 968 Construction in progress 3,713 221 Property and equipment, gross 41,480 36,741 Less: accumulated depreciation ( 16,650 ) ( 11,880 ) Property and equipment, net $ 24,830 $ 24,861 Total depreciation expense was $ 5.8 million for the fifty-three weeks ended August 31, 2024, $ 4.4 million for the fifty-two weeks ended August 26, 2023, and $ 3.2 million for the fifty-two weeks ended August 27, 2022. 65 Table of Contents 5. Goodwill and Intangibles Changes to Goodwill during the fifty-three weeks ended August 31, 2024 were as follows: (In thousands) Goodwill Balance as of August 26, 2023 $ 543,134 Acquisition of business 48,553 Balance as of August 31, 2024 $ 591,687 The change in Goodwill during the fifty-three week period ended August 31, 2024, was the result of the acquisition method of accounting related to the OWYN Acquisition as described in Note 3. There were no changes in the Company’s goodwill in the fifty-two week period ended August 26, 2023. There were no impairment charges related to goodwill during the fifty-three weeks ended August 31, 2024, or since the inception of the Company. Intangible assets, net in the Consolidated Balance Sheets consist of the following: August 31, 2024 (In thousands) Useful life Gross carrying amount Accumulated amortization Net carrying amount Intangible assets with indefinite life: Brands and trademarks Indefinite life $ 1,197,000 $ — $ 1,197,000 Intangible assets with finite lives: Customer relationships 15 years $ 194,500 $ 65,171 $ 129,329 Licensing agreements 13 years 22,000 12,415 9,585 Proprietary recipes and formulas 7 years 7,000 7,000 — Software and website development costs 3 - 5 years 5,034 4,921 113 Intangible assets in progress 3 - 5 years 439 — 439 $ 1,425,973 $ 89,507 $ 1,336,466 August 26, 2023 (In thousands) Useful life Gross carrying amount Accumulated amortization Net carrying amount Intangible assets with indefinite life: Brands and trademarks Indefinite life $ 974,000 $ — $ 974,000 Intangible assets with finite lives: Customer relationships 15 years $ 174,000 $ 53,303 $ 120,697 Licensing agreements 13 years 22,000 10,498 11,502 Proprietary recipes and formulas 7 years 7,000 6,131 869 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 fifty-three weeks ended August 31, 2024, were primarily related to the OWYN Acquisition and recurring amortization expense. In conjunction with the Acquisition, the Company acquired a brand indefinite lived intangible asset and a customer relationship intangible asset, which had fair values of approximately $ 223.0 million and $ 20.5 million as of the date of the Acquisition, respectively. Changes related to the fifty-two weeks ended August 26, 2023, and August 27, 2022, were primarily related to recurring amortization expense. 66 Table of Contents During the third quarter of the fiscal year ended August 31, 2024, the Company conducted a qualitative impairment assessment that identified potential indicators of impairment for the Atkins brand indefinite lived intangible asset. Accordingly, the Company proceeded to conduct a quantitative impairment assessment over the asset. Based on our testing, the asset had an excess fair value well over its respective carrying value, resulting in no impairment. During the fifty-three weeks ended August 31, 2024, the Company performed qualitative impairment assessments for its indefinite-lived intangible assets as of the first day of the fourth quarter of fiscal year 2024. The qualitative assessment did not identify indicators of impairment, and it was determined that it was more likely than not each indefinite-lived intangible asset had fair values in excess of their carrying values. Accordingly, no further impairment assessments were necessary. There were no impairment charges related to indefinite-lived intangibles recognized in the fifty-three weeks ended August 31, 2024, August 26, 2023, or August 27, 2022, respectively. During the fifty-three weeks ended August 31, 2024, the Company did not identify indicators of impairment related to its finite-lived intangible assets, which are tested for impairment when events or circumstances indicated that the carrying amount may not be recoverable. There were no impairment charges related to the Company’s finite-lived intangible assets in the fifty-three weeks ended August 31, 2024, August 26, 2023, or August 27, 2022, respectively. Amortization expense related to intangible assets was $ 15.2 million for the fifty-three weeks ended August 31, 2024, $ 15.7 million for the fifty-two weeks ended August 26, 2023, and $ 15.8 million for the fifty-two weeks ended August 27, 2022. Estimated future amortization for each of the next five fiscal years and thereafter is as follows: (In thousands) Amortization 2025 14,933 2026 14,903 2027 14,903 2028 14,903 2029 14,891 Thereafter 64,494 Total $ 139,027 6. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities in the Consolidated Balance Sheets were comprised of the following: (In thousands) August 31, 2024 August 26, 2023 Accrued professional fees $ 2,719 $ 1,290 Accrued advertising allowances and claims 4,203 1,960 Accrued bonus expenses 11,603 8,387 Accrued freight expenses 3,376 1,171 Accrued payroll-related expenses 3,815 3,792 Accrued commissions 1,875 1,466 Income taxes payable 2,700 65 VAT payable 5,915 4,707 Current operating lease liabilities 5,494 7,566 Accrued R&D expenses 1,564 360 Other accrued expenses 6,527 4,298 Accrued expenses and other current liabilities $ 49,791 $ 35,062 The increase in Accrued expenses and other current liabilities as of August 31, 2024, as compared to August 26, 2023, was primarily a result of the OWYN Acquisition. 7. Long-Term Debt and Line of Credit On July 7, 2017, the Company entered into a credit agreement with Barclays Bank PLC and other parties (as amended to date, the “Credit Agreement”). The Credit Agreement at that time provided for (i) a term facility of $ 200.0 million (“Term Facility”) with a seven -year maturity and (ii) a revolving credit facility of up to $ 75.0 million (the “Revolving Credit Facility”) with a five -year maturity. Substantially 67 Table of Contents concurrent with the consummation of the business combination which formed the Company between Conyers Park Acquisition Corp. and NCP-ATK Holdings, Inc. on July 7, 2017, the full $ 200.0 million of the Term Facility (the “Term Loan”) was drawn. On November 7, 2019, the Company entered into a second amendment (the “Incremental Facility Amendment”) to the Credit Agreement to increase the principal borrowed on the Term Facility by $ 460.0 million. The Term Facility together with the incremental borrowing make up the Initial Term Loans (as defined in the Incremental Facility Amendment). The Incremental Facility Amendment was executed to partially finance the acquisition of Quest Nutrition, LLC on November 7, 2019. No amounts under the Term Facility were repaid as a result of the execution of the Incremental Facility Amendment. Effective as of December 16, 2021, the Company entered into a third amendment (the “Extension Amendment”) to the Credit Agreement. The Extension Amendment provided for an extension of the stated maturity date of the Revolving Commitments and Revolving Loans (each as defined in the Credit Agreement) from July 7, 2022, to the earlier of (i) 91 days prior to the 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. 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 SOFR and related replacement provisions for LIBOR. On April 25, 2023, the Company entered into the “2023 Repricing Amendment” to the Credit Agreement. The 2023 Repricing Amendment, (i) reduced the interest rate per annum applicable to the Initial Term Loans outstanding under the Credit Agreement immediately prior to April 25, 2023, and (ii) provided for an extension of the maturity date of the Initial Term Loans from July 7, 2024, to March 17, 2027. 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 borrowings under the Term Facility. The 2024 Incremental Facility Amendment was executed to partially finance the OWYN Acquisition. No amounts under the Term Facility were repaid as a result of the execution of the 2024 Incremental Facility Amendment. Effective as of the 2024 Incremental Facility Amendment, the interest rate per annum for the Initial Term Loans is based on either: i. A base rate equaling the higher of (a) the “prime rate,” (b) the federal funds effective rate plus 0.50 %, or (c) the Adjusted Term SOFR Rate (as defined in the Credit Agreement) applicable for an interest period of one month plus 2.50 % plus (x) 1.50 % margin for the Term Loan or (y) 2.00 % margin for the Revolving Credit Facility; or ii. SOFR plus a credit spread adjustment equal to 0.10 % for one-month SOFR, 0.15 % for up to three-month SOFR and 0.25 % for up to six-month SOFR, subject to a floor of 0.50 %, plus (x) 2.50 % margin for the Term Loan or (y) 3.00 % margin for the Revolving Credit Facility. In connection with the closing of the 2024 Incremental Facility Amendment, the Company expensed $ 3.4 million of non-deferrable third-party costs through Business transaction costs and capitalized $ 1.2 million of third-party financing costs. The Simply Good Foods Company is not a borrower under the Credit Agreement and has not provided a guarantee of the Credit Agreement. Simply Good Foods USA, Inc., is the administrative borrower and certain other subsidiary holding companies are co-borrowers under the Credit Agreement. Each of the Company’s domestic subsidiaries that is not a named borrower under the Credit Agreement has provided a guarantee on a secured basis. As security for the payment or performance of the debt under the Credit Agreement, the borrowers and the guarantors have pledged certain equity interests in their respective subsidiaries and granted the lenders a security interest in substantially all of their domestic assets. All guarantors other than Quest Nutrition, LLC and Only What You Need, Inc. are holding companies with no assets other than their investments in their respective subsidiaries. The Credit Agreement contains certain financial and other covenants that limit the Company’s ability to, among other things, incur and/or undertake asset sales and other dispositions, liens, indebtedness, certain acquisitions and investments, consolidations, mergers, reorganizations and other fundamental changes, payment of dividends and other distributions to equity and warrant holders, and prepayments of material subordinated debt, in each case, subject to customary exceptions materially consistent with credit facilities of such type and size. The Revolving Credit Facility has a maximum total net leverage ratio equal to or less than 6.00 :1.00 contingent on credit extensions in excess of 30 % of the total amount of commitments available under the Revolving Credit Facility. 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 August 31, 2024, and August 26, 2023, respectively. 68 Table of Contents Long-term debt consists of the following: (In thousands) August 31, 2024 August 26, 2023 Term Facility (effective rate of 7.9% at August 31, 2024) $ 400,000 $ 285,000 Finance lease liabilities (effective rate of 0.0% at August 31, 2024) — 143 Less: Deferred financing fees 2,515 3,351 Total debt 397,485 281,792 Less: Current finance lease liabilities — 143 Long-term debt, net of deferred financing fees $ 397,485 $ 281,649 As of August 31, 2024, the Company had letters of credit in the amount of $ 2.1 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 August 31, 2024. The Company is not required to make principal payments on the Term Facility over the twelve months following the period ended August 31, 2024. The outstanding balance of the Term Facility is due upon its maturity in March 2027. As of August 31, 2024, aggregate principal maturities of debt for each of the next five fiscal years and thereafter are as follows: (In thousands) Principal maturities 2025 $ — 2026 — 2027 400,000 2028 — 2029 — Thereafter — Total debt $ 400,000 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 August 31, 2024, 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. 69 Table of Contents 8. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measurements, a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies, is used: Level 1 – Valuations based on quoted prices for identical assets and liabilities in active markets. Level 2 – Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3 – Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. Level 3 Measurements During the fifty-two weeks ended August 27, 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. On January 7, 2022, Conyers Park elected to exercise the Private Warrants in full 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 August 31, 2024, August 26, 2023, or August 27, 2022. Refer to Note 12, 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 Income and Comprehensive Income. The adjustments for the fifty-two weeks ended August 27, 2022, resulted in a loss of $ 30.1 million. As a result of the warrant exercise on January 7, 2022, there was no associated adjustment during the fifty-three weeks ended August 31, 2024, or the fifty-two weeks ended August 26, 2023. There were no transfers of financial instruments between the three levels of the fair value hierarchy during the fiscal years ended August 31, 2024, August 26, 2023, and August 27, 2022, respectively. The Company’s non-financial assets, which consist primarily of property and equipment, right-of-use assets, goodwill, and other intangible assets, are not required to be carried at fair value on a recurring basis and are reported at carrying value. The fair values of these assets are determined, as required, based on Level 3 measurements, including estimates of the amount and timing of future cash flows based upon historical experience, expected market conditions, and management’s plans. All other components of the balance sheet such as accounts receivable, cash and cash equivalents, and others approximate fair value as of August 31, 2024. 9. Income Taxes The sources of income before income taxes are as follows: 53-Weeks Ended 52-Weeks Ended 52-Weeks Ended (In thousands) August 31, 2024 August 26, 2023 August 27, 2022 Domestic $ 184,580 $ 173,733 $ 148,080 Foreign 1,470 1,959 2,489 Total income before income taxes $ 186,050 $ 175,692 $ 150,569 70 Table of Contents Income tax expense was comprised of the following: 53-Weeks Ended 52-Weeks Ended 52-Weeks Ended (In thousands) August 31, 2024 August 26, 2023 August 27, 2022 Current: Federal $ 30,600 $ 24,740 $ 22,733 State and local 7,392 6,128 6,226 Foreign 383 659 1,247 Total current expense $ 38,375 $ 31,527 $ 30,206 Deferred: Federal $ 5,746 $ 8,804 $ 11,218 State and local 2,502 1,740 1,614 Foreign 118 46 ( 1,043 ) Total deferred income tax expense 8,366 10,590 11,789 Total tax expense $ 46,741 $ 42,117 $ 41,995 A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows: 53-Weeks Ended 52-Weeks Ended 52-Weeks Ended (In thousands) August 31, 2024 August 26, 2023 August 27, 2022 Statutory income tax expense: 21.0 % 21.0 % 21.0 % Change in fair value of warrant liabilities — — 5.0 State income tax expense, net of federal 4.2 4.0 4.2 Valuation allowance — — ( 1.5 ) Taxes on foreign income above the U.S. tax 0.1 0.2 1.3 Change in tax rate 0.2 — ( 0.2 ) Non-deductible transaction costs 0.5 — — Other permanent items ( 0.9 ) ( 1.2 ) ( 1.9 ) Income tax expense 25.1 % 24.0 % 27.9 % 71 Table of Contents The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities at August 31, 2024, and August 26, 2023, were as follows: (In thousands) August 31, 2024 August 26, 2023 Deferred tax assets Accounts receivable allowances $ 1,371 $ 1,381 Accrued expenses 4,520 3,732 Net operating loss carryforwards 17,200 26 Share based compensation 4,736 4,398 Lease liabilities 9,956 11,200 Capitalized Section 174 Expenditures 4,330 1,053 Tax capitalization of inventory costs 1,517 2,177 Transaction costs 1,838 1,961 Federal benefit of state taxes 1,529 1,418 Other 926 585 Deferred tax assets 47,923 27,931 Valuation allowance — — Deferred tax asset, net of valuation allowance $ 47,923 $ 27,931 Deferred tax liabilities: Excess tax over book depreciation ( 3,954 ) ( 4,870 ) Intangible assets ( 200,130 ) ( 127,791 ) Lease right-of-use assets ( 8,774 ) ( 9,997 ) Other ( 1,077 ) ( 1,406 ) Deferred tax liabilities ( 213,935 ) ( 144,064 ) Net deferred tax liabilities $ ( 166,012 ) $ ( 116,133 ) The Company had federal net operating loss carryforwards of $ 63.0 million and $ 0.0 million, state net operating loss carryforwards of $ 44.2 million and $ 0.3 million, and foreign net operating loss carryforwards of $ 1.7 million and $ 0.0 million at August 31, 2024 and August 26, 2023, respectively. Federal net operating loss carryforwards will begin to expire in 2037 and the state net operating loss carryforwards will begin to expire in 2031. As of August 31, 2024, the Company has no valuation allowances on its deferred tax assets. As of August 31, 2024, the Company does not intend to indefinitely reinvest its foreign earnings within its subsidiary in Canada and has not recognized any tax liabilities related to this jurisdiction. It is the Company’s intention to reinvest the earnings of its other non-U.S. subsidiaries in its Australia and New Zealand operations. As of August 31, 2024, the Company has not made a provision for U.S. or additional foreign withholding taxes for any outside basis differences inherent in its investments in foreign subsidiaries that are indefinitely reinvested. It is not practicable to estimate the amount of deferred tax liability related to investments in these foreign subsidiaries. As of August 31, 2024, and August 26, 2023, the Company has no unrecognized tax benefits. The Company records interest and penalties associated with unrecognized tax benefits as a component of tax expense. As of August 31, 2024, and August 26, 2023, the Company has not accrued any interest or penalties on unrecognized tax benefits, as there is no position recorded as of these fiscal year-ends. No changes to the uncertain tax position balance are anticipated within the next 12 months and are not expected to materially affect the financial statements. As of August 31, 2024, tax years 2017 to 2023 remain subject to examination in the United States by the Internal Revenue Service and state tax authorities and the tax years 2017 to 2023 remain subject to examination in other major foreign jurisdictions where the Company conducts business. State income tax returns are generally subject to examination for a period of three to six years after the filing of the respective return. The future utilization of federal net operating loss carryforwards generated after 2017 is limited to 80% of taxable income. An additional limitation applies to the use of federal net operating loss and credit carryforwards, under Section 382 of the Internal Revenue Code of 72 Table of Contents 1986, as amended, that is applicable if the Company experiences an "ownership change”. The Company has experienced various “ownership changes” in prior years. With the OWYN Acquisition, an "ownership change" occurred in the current year. The resulting Section 382 limitations are not expected to materially affect the Company’s ability to utilize carryforwards. Future changes in the ownership of the Company could further limit the Company’s ability to utilize its net operating losses and credits. In 2021, the Organization for Economic Co-operation and Development (OECD) announced Pillar Two Model Rules, which call for the taxation of large multinational corporations at a minimum rate of 15%. Many non-U.S. tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in fiscal 2025 with the adoption of additional components in later years or announced their plans to enact legislation in future years. The currently enacted Pillar Two Model Rules are not expected to have a significant effect on the Company’s provision for income taxes. The Company continues to monitor developments and evaluate effects, if any, of these provisions on its results of operations and cash flows for future years. 10. Leases The components of lease expense were as follows. 53-Weeks Ended 52-Weeks Ended 52-Weeks Ended (In thousands) Statement of Operations Caption August 31, 2024 August 26, 2023 August 27, 2022 Operating lease cost: Lease cost Cost of goods sold and General and administrative $ 9,011 $ 8,998 $ 9,077 Variable lease cost (1) Cost of goods sold and General and administrative 3,825 3,556 3,068 Total operating lease cost $ 12,836 $ 12,554 $ 12,145 Finance lease cost: Amortization of right-of use assets Cost of goods sold $ 125 $ 241 $ 273 Interest on lease liabilities Interest expense 2 14 30 Total finance lease cost $ 127 $ 255 $ 303 Total lease cost $ 12,963 $ 12,809 $ 12,448 (1) Variable lease cost primarily consists of common area maintenance, such as cleaning and repairs. The right-of-use assets and corresponding liabilities related to both operating and finance leases are as follows: (In thousands) Balance Sheets Caption August 31, 2024 August 26, 2023 Assets Operating lease right-of-use assets Other long-term assets $ 35,097 $ 40,022 Finance lease right-of-use assets Property and equipment, net — 125 Total lease assets $ 35,097 $ 40,147 Liabilities Current: Operating lease liabilities Accrued expenses and other current liabilities $ 5,494 $ 7,566 Finance lease liabilities Current maturities of long-term debt — 143 Long-term: Operating lease liabilities Other long-term liabilities 34,330 37,272 Total lease liabilities $ 39,824 $ 44,981 73 Table of Contents Future maturities of lease liabilities as of August 31, 2024, were as follows: (In thousands) Operating Leases Fiscal year ending: 2025 $ 7,536 2026 6,783 2027 6,936 2028 6,267 2029 6,183 Thereafter 14,679 Total lease payments 48,384 Less: Interest ( 8,560 ) Present value of lease liabilities $ 39,824 The weighted-average remaining lease terms and weighted-average discount rates for operating and finance leases were as follows: August 31, 2024 August 26, 2023 Weighted-average remaining lease term (in years) Operating leases 6.50 6.24 Finance leases 0.00 0.61 Weighted-average discount rate Operating leases 5.1 % 4.4 % Finance leases — % 5.6 % Supplemental and other information related to leases was as follows: 53-Weeks Ended 52-Weeks Ended 52-Weeks Ended (In thousands) August 31, 2024 August 26, 2023 August 27, 2022 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 12,042 $ 11,002 $ 9,656 Operating cash flows from finance leases $ 955 $ 544 $ 631 Financing cash flows from finance leases $ 145 $ 278 $ 313 11. Commitments and Contingencies Litigation The Company is a party to certain litigation and claims that are considered normal to the operations of the business. From time to time, the Company has been and may again become involved in legal proceedings arising in the ordinary course of business. 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. Other The Company enters into endorsement contracts with certain celebrity figures and social media influencers to promote and endorse the Quest, Atkins, and OWYN 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 contracts in place and achievement of performance conditions as of August 31, 2024, the Company will be required to make payments of $ 1.2 million over the next year. 74 Table of Contents 12. Stockholders’ Equity Warrants to Purchase Common Stock During the fifty-two weeks ended August 27, 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 in full 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 August 31, 2024, or August 26, 2023. As discussed in Note 8, 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 Consolidated Statements of Income and Comprehensive Income. Stock Repurchase Program The Company adopted a $ 50.0 million stock repurchase program on November 13, 2018. 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. The stock repurchase program does not obligate the Company to acquire any specific number of shares or acquire shares over any specific period of time. 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 fifty-three weeks ended August 31, 2024. During the fifty-two weeks ended August 26, 2023, the Company repurchased 546,346 shares of common stock at an average share price of $ 30.11 per share. During the fifty-two weeks ended August 27, 2022, the Company repurchased 1,720,520 shares of common stock at an average share price of $ 34.79 per share. As of August 31, 2024, approximately $ 71.5 million remained available under the stock repurchase program. Accumulated Other Comprehensive Loss During the fifty-two weeks ended August 27, 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 Consolidated Statements of Income and Comprehensive Income. 13. 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. 75 Table of Contents The following table reconciles the numerators and denominators used in the computations of both basic and diluted earnings per share: 53-Weeks Ended 52-Weeks Ended 52-Weeks Ended (In thousands, except share and per share data) August 31, 2024 August 26, 2023 August 27, 2022 Basic earnings per share computation: Numerator: Net income available to common stock stockholders $ 139,309 $ 133,575 $ 108,574 Denominator: Weighted average common shares outstanding – basic 99,929,196 99,442,046 98,754,913 Basic earnings per share from net income $ 1.39 $ 1.34 $ 1.10 Diluted earnings per share computation: Numerator: Numerator for diluted earnings per share $ 139,309 $ 133,575 $ 108,574 Denominator: Weighted average common shares outstanding – basic 99,929,196 99,442,046 98,754,913 Employee stock options 1,112,459 1,241,762 1,578,329 Non-vested stock units 240,233 196,271 255,914 Weighted average common shares – diluted 101,281,888 100,880,079 100,589,156 Diluted earnings per share from net income $ 1.38 $ 1.32 $ 1.08 Diluted earnings per share calculations for the fifty-two weeks ended August 27, 2022, excluded 0.7 million shares issuable upon exercise of Private Warrants, respectively, that would have been anti-dilutive. Diluted earnings per share calculations for the fifty-three weeks ended August 31, 2024, and the fifty-two weeks ended August 26, 2023, and August 27, 2022, excluded 0.8 million shares, 0.6 million shares, 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 fifty-three weeks ended August 31, 2024, and the fifty-two weeks ended August 26, 2023, and August 27, 2022, excluded an immaterial number of non-vested restricted stock units that would have been anti-dilutive. 14. 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 its 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. For the fifty-three weeks ended August 31, 2024, and the fifty-two weeks ended August 26, 2023, and August 27, 2022, the Company recorded stock-based compensation expense of $ 18.4 million, $ 14.5 million, and $ 11.7 million, respectively. In July 2017, the Company’s stockholders approved the 2017 Omnibus Incentive Plan (the “Incentive Plan”). The Incentive Plan provides for the issuance of a maximum of 9,067,917 shares of stock-denominated awards to directors, employees, officers and agents of the Company. As of August 31, 2024, there were 3.0 million shares available for grant under the Incentive Plan. Stock Options Stock options granted under the Incentive Plan are granted at a price equal to or more than the fair value of common stock on the date the option is granted. Stock options under the Incentive Plan generally become exercisable ratably over three years from the date of grant and must be exercised within ten years from the date of grant. 76 Table of Contents The following table summarizes stock option activity for the fifty-three weeks ended August 31, 2024: (In thousands, except share and per share data) Shares underlying options Weighted average exercise price Weighted average remaining life (years) Aggregate intrinsic value Outstanding as of August 26, 2023 2,668,462 $ 20.41 5.56 $ 39,610 Granted 17,633 33.02 Exercised ( 256,879 ) 16.71 Forfeited ( 18,649 ) 39.50 Outstanding as of August 31, 2024 2,410,567 $ 20.75 4.39 $ 29,826 Vested and expected to vest as of August 31, 2024 2,410,567 $ 20.75 4.39 $ 29,826 Exercisable as of August 31, 2024 2,131,180 $ 18.53 3.89 $ 29,826 The following table summarizes information about stock options outstanding at August 31, 2024: Range of Exercise Prices Number outstanding Weighted average exercise price Weighted average remaining life (years) Number exercisable Weighted average exercise price $ 12.00 - 17.77 1,266,743 $ 12.45 2.78 1,266,743 $ 12.45 $ 17.78 - 23.55 387,810 20.13 4.59 387,810 20.13 $ 23.56 - 29.33 158,044 24.38 4.97 158,044 24.38 $ 29.34 - 35.11 17,633 33.02 9.03 — — $ 35.12 - 40.88 580,337 37.91 7.47 318,583 37.87 2,410,567 $ 20.75 4.39 2,131,180 $ 18.53 The weighted average fair value of options granted during the fifty-three weeks ended August 31, 2024, and the fifty-two weeks ended August 26, 2023, and August 27, 2022, were $ 14.36 , $ 16.58 , and $ 15.32 , respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes Option Pricing Model based on the following assumptions: 53-Weeks Ended 52-Weeks Ended 52-Weeks Ended August 31, 2024 August 26, 2023 August 27, 2022 Expected volatility 37.00 % 39.00 % 37.07 % Expected dividend yield — % — % — % Expected option term 6 6 6 Risk-free rate of return 4.39 % 4.27 % 1.26 % As the Company has now been listed for more than five years for the years presented above, which is broadly consistent with the expected term of the options, the Company has based its Black-Scholes valuation model’s expected volatility assumption on the actual volatility of its daily closing share price over the period since listing to the valuation date. The risk-free rates are based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term. Future annual dividends over the expected term are estimated to be nil . As of August 31, 2024, the Company had $ 2.3 million of total unrecognized compensation cost related to stock option plans that will be recognized over a weighted average period of 1.4 years. During the fifty-three weeks ended August 31, 2024, and fifty-two weeks ended August 26, 2023, and August 27, 2022, the Company received $ 4.3 million, $ 5.2 million, and $ 4.3 million in cash from stock option exercises, respectively. Restricted Stock Units Restricted stock units granted under the Incentive Plan are granted at a price equal to closing market price of the Company’s common stock on the date of grant. Restricted stock units under the Incentive Plan generally vest over three years . 77 Table of Contents The following table summarizes restricted stock unit activity for the fifty-three weeks ended August 31, 2024: Units Weighted average grant-date fair value Non-vested as of August 26, 2023 514,498 $ 35.59 Granted 337,183 36.64 Vested ( 272,485 ) 32.93 Forfeited ( 32,925 ) 38.72 Non-vested as of August 31, 2024 546,271 $ 37.38 As of August 31, 2024, the Company had $ 11.8 million of total unrecognized compensation cost related to restricted stock units that will be recognized over a weighted average period of 1.6 years. Performance Stock Units During the fifty-three weeks ended August 31, 2024, the Board of Directors granted performance stock units under the Company’s Incentive Plan. The number of shares issuable as a result of grants of performance stock units is determined based on the performance criteria of the Company’s relative total shareholder return, or relative TSR, measured for the Company and each company in the Russell 3000 Food & Beverage index using the immediately preceding 30-day average share price at the beginning and end of the applicable three -year performance period. The percentile rank of the Company’s TSR within the peer group determines the percent of the target award earned, ranging between 0 % and 200 %. The related compensation expense is recognized regardless of whether or not the market condition is satisfied, provided the requisite service is rendered. Performance stock units were valued using a Monte-Carlo simulation. The following table summarizes performance stock unit activity for the fifty-three weeks ended August 31, 2024: Units Weighted average grant-date fair value Non-vested as of August 26, 2023 191,779 $ 42.41 Granted 181,853 38.77 Vested ( 189,884 ) 21.52 Forfeited ( 3,957 ) 57.43 Non-vested as of August 31, 2024 179,791 $ 59.08 Performance stock units are generally granted to employees as a part of the annual grant in November of the associated fiscal year, although the Board of Directors reserves the right to administer mid-year grants from time to time as they see fit. The fair value of each performance stock unit grant is estimated on the date of grant using a Monte-Carlo simulation based on the following assumptions presented below which are associated with each year’s annual grant: 53-Weeks Ended 52-Weeks Ended 52-Weeks Ended August 31, 2024 August 26, 2023 August 27, 2022 Expected volatility 33.96 % 45.00 % 43.00 % Expected dividend yield — % — % — % Expected performance term 2.93 3 3 Risk-free rate of return 4.62 % 4.55 % 0.70 % Fair value $ 57.43 $ 62.55 $ 63.42 As of August 31, 2024, 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 1.4 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 if and when the applicable vesting criteria has been met. SARs cliff vest three years from the date of grant and must be exercised within ten years . 78 Table of Contents The following table summarizes SARs activity for the fifty-three weeks ended August 31, 2024: Shares Underlying SARs Weighted average exercise price Weighted average remaining contractual life (in years) Outstanding as of August 26, 2023 150,000 $ 37.67 Granted — — Exercised — — Forfeited — — Outstanding as of August 31, 2024 150,000 $ 37.67 0.00 Vested and expected to vest as of August 31, 2024 150,000 $ — 0.00 Exercisable as of August 31, 2024 — $ — 0.00 The SARs exercised in the fifty-two weeks ended August 26, 2023, resulted in a net issuance of 38,850 shares of the Company’s common stock. The SARs granted in the fifty-two weeks ended August 26, 2023, are liability-classified; therefore, the related stock-based compensation expense is based on the vesting provisions and the fair value of the awards. 15. Segment and Customer Information Following the OWYN Acquisition, the Company's operations are organized into two operating segments, Quest and Atkins, and OWYN, which are aggregated into one reporting segment due to similar financial, economic and operating characteristics. The operating segments are also similar in the following areas: (a) the nature of the products; (b) the nature of the production processes; (c) the methods used to distribute products to customers; (d) the type of customer for the products; and, (e) the nature of the regulatory environment. The Company also designed its organizational structure to support entity-wide business functions across brands, products, customers, and geographic regions. As a result, during the fifty-three weeks ended August 31, 2024, the Company determined its operations are organized into two operating segments, which were aggregated into one reporting segment due to similar financial, economic and operating characteristics. During the fifty-two weeks ended August 26, 2023, and August 27, 2022, the Company determined its operations are organized into one , consolidated operating segment and reportable segment. Reconciliation of the totals of reported segment revenue, profit or loss measurement, assets and other significant items reported by segment to the corresponding GAAP totals is not applicable to the Company as it only has one reportable segment. Additionally, revenue from transactions with external customers for each of Simply Good Foods’ 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 brand: 53-Weeks Ended 52-Weeks Ended 52-Weeks Ended (In thousands) August 31, 2024 August 26, 2023 August 27, 2022 North America (1) Atkins $ 491,986 $ 526,769 $ 540,328 Quest 777,394 682,789 593,943 OWYN 29,213 — — Total North America 1,298,593 1,209,558 1,134,271 International (1) 32,728 33,114 34,407 Total $ 1,331,321 $ 1,242,672 $ 1,168,678 (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. 79 Table of Contents The following is a summary of long lived assets by geographic area: (In thousands) August 31, 2024 August 26, 2023 Long lived assets North America (1) $ 24,830 $ 24,861 Total $ 24,830 $ 24,861 (1) The North America geographic area consists of long-lived assets substantially related to the United States and there is no individual foreign country in which more than 10% of the Company’s long-lived assets are located or that is otherwise deemed individually material. Significant Customers Credit risk for the Company was concentrated in three customers who each comprised more than 10% of the Company’s total sales for the fifty-three weeks ended August 31, 2024, and fifty-two weeks ended August 26, 2023, and August 27, 2022. 53-Weeks Ended 52-Weeks Ended 52-Weeks Ended August 31, 2024 August 26, 2023 August 27, 2022 Customer 1 31 % 31 % 31 % Customer 2 18 % 16 % 13 % Customer 3 n/a n/a 10 % n/a - Not applicable as the customer was not significant during these fiscal years. At August 31, 2024, and August 26, 2023, the following amounts of the Company’s accounts receivable, net were related to these significant customers for the periods in which the customers were significant: (In thousands) August 31, 2024 August 26, 2023 Customer 1 $ 41,943 28 % $ 43,098 30 % Customer 2 $ 51,411 34 % $ 37,384 26 % 16. 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 Quest Acquisition. 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 the aforementioned restructuring activities during the fifty-two weeks ended August 27, 2022. During the fifty-two weeks ended August 27, 2022, the Company incurred $0.1 million of restructuring charges which included an immaterial gain on lease termination related to its lease in the Netherlands. 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 Post-employment 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 Consolidated Statements of Income and Comprehensive Income. No restructuring and restructuring-related costs were incurred in the fifty-three weeks ended August 31, 2024, or the fifty-two weeks ended August 26, 2023. 80 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.