What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-01-08 compared with 2024-06-27 · 187 added, 143 removed, 377 unchanged (47% of the section changed)

3 unchanged sentences

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

May 25, 2024 August 26, 2023

November 30, 2024 August 31, 2024

Current assets:

5 unchanged sentences

Other current assets

11,823 15,974

Total current assets

16 unchanged sentences

46,090 49,791

Current maturities of long-term debt

Total current liabilities

12 unchanged sentences

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

Common stock, $0.01 par value, 600,000,000 shares authorized, 102,500,950 and 101,929,868 shares issued at May 25, 2024 and August 26, 2023, respectively 1,025 1,019

Treasury stock, 2,365,100 shares and 2,365,100 shares at cost at May 25, 2024 and August 26, 2023, respectively ( 78,451 ) ( 78,451 )

Common stock, $0.01 par value, 600,000,000 shares authorized, 103,393,159 and 101,929,868 shares issued at November 30, 2024 and August 31, 2024, respectively 1,034 1,025

Treasury stock, 2,365,100 shares and 2,365,100 shares at cost at November 30, 2024 and August 31, 2024, respectively ( 78,451 ) ( 78,451 )

Additional paid-in-capital

11 unchanged sentences

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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

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

Thirteen Weeks Ended

November 30, 2024 November 25, 2023

Net sales $ 341,268 $ 308,678

11 unchanged sentences

Interest expense ( 7,861 ) ( 6,034 )

(Loss) gain on foreign currency transactions ( 12 ) 180 191 74

Gain on foreign currency transactions 120 226

Other income 15 6

Total other expense ( 4,057 ) ( 7,058 ) ( 13,464 ) ( 22,457 )

Total other income (expense) ( 6,950 ) ( 4,712 )

Income before income taxes 47,675 47,108

14 unchanged sentences

(Unaudited, dollars in thousands)

Thirty-Nine Weeks Ended

May 25, 2024 May 27, 2023

Thirteen Weeks Ended

November 30, 2024 November 25, 2023

Operating activities

4 unchanged sentences

Stock compensation expense 3,844 4,168

Estimated credit (gains) losses ( 167 ) 206

Unrealized loss on foreign currency transactions ( 191 ) ( 74 )

Estimated credit losses 750 51

Unrealized gain on foreign currency transactions ( 120 ) ( 226 )

Deferred income taxes 3,374 4,084

22 unchanged sentences

Cash received on repayment of note receivable — 600

Repurchase of common stock — ( 16,448 )

Principal payments of long-term debt ( 50,000 ) ( 10,000 )

Deferred financing costs — ( 2,694 )

Net cash used in financing activities

1 unchanged sentence

Cash and cash equivalents

Net increase in cash 120,841 1,387

Net (decrease) increase in cash ( 10,979 ) 33,620

Effect of exchange rate on cash 208 56

2 unchanged sentences

$ 121,759 $ 121,391

Thirty-Nine Weeks Ended

May 25, 2024 May 27, 2023

Thirteen Weeks Ended

November 30, 2024 November 25, 2023

Supplemental disclosures of cash flow information

2 unchanged sentences

Cash paid for taxes

$ 23,801 $ 19,542

Non-cash investing and financing transactions

12 unchanged sentences

Foreign currency translation adjustments — — — — — — ( 387 ) ( 387 )

Repurchase of common stock — — — — — — — —

Shares issued upon vesting of restricted stock units and performance stock units 164,093 2 — — ( 2,317 ) — — ( 2,315 )

1 unchanged sentence

Balance at November 30, 2024 103,393,159 $ 1,034 2,365,100 $ ( 78,451 ) $ 1,331,000 $ 525,387 $ ( 2,426 ) $ 1,776,544

Net income — — — — — 33,123 — 33,123

Stock-based compensation — — — — 4,288 — — 4,288

Foreign currency translation adjustments — — — — — — ( 15 ) ( 15 )

Repurchase of common stock — — — — — — — —

Shares issued upon vesting of restricted stock units 5,285 — — — ( 107 ) — — ( 107 )

Exercise of options to purchase common stock 173,100 2 — — 3,013 — — 3,015

Balance at February 24, 2024 102,353,618 $ 1,024 2,365,100 $ ( 78,451 ) $ 1,310,605 $ 416,640 $ ( 2,336 ) $ 1,647,482

Net income — — — — — $ 41,334 — 41,334

Stock-based compensation — — — — 4,193 — — 4,193

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

Repurchase of common stock — — — — — — — —

Shares issued upon vesting of restricted stock units 63,553 — — — ( 1,070 ) — — ( 1,070 )

Exercise of options to purchase common stock 83,779 1 — — 1,277 — — 1,278

Balance at May 25, 2024 102,500,950 1,025 2,365,100 ( 78,451 ) 1,315,005 457,974 ( 2,241 ) 1,693,312

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

4 unchanged sentences

Foreign currency translation adjustments — — — — — — 272 272

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

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

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

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

Net income — — — — — 25,642 — 25,642

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

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

Repurchase of common stock — — — — — — — —

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

Exercise of options to purchase common stock 12,130 — — — 228 — — 228

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

Net income — — — — — 35,431 — 35,431

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

Repurchase of common stock — — — — — — — —

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

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

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

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

See accompanying notes to the unaudited consolidated financial statements.

4 unchanged sentences

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

The product portfolio the Company develops, markets and sells consists primarily of protein bars, ready-to-drink (“RTD”) shakes, sweet and salty snacks and confectionery products marketed under the Quest® and Atkins® brand names.

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

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

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

The Company distributes its products in major retail channels, primarily in North America, including grocery, club, and mass merchandise, as well as through e-commerce, convenience, specialty, and other channels.

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.

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.

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

Quest for consumers seeking a variety of protein-rich foods and beverages that also limit sugars and simple carbohydrates, Atkins for those following a low-carbohydrate lifestyle or seeking to manage weight or blood sugar levels, and OWYN for consumers seeking protein-rich beverages that are plant-based and tested for the top nine allergens that also limit sugars and simple carbohydrates.

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

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

The common stock of Simply Good Foods is listed on the Nasdaq Capital Market under the symbol “SMPL.”

3 unchanged sentences

Unless the context otherwise requires, “we,” “us,” “our” and the “Company” refer to Simply Good Foods and its subsidiaries.

In context, “Quest” may also refer to the Quest brand, “Atkins” may also refer to the Atkins brand, and “OWYN” may also refer to the OWYN brand.

Atkins, Atkins Endulge, Quest, OWYN, and the Simply Good logo are either registered trademarks or trademarks of the Company’s wholly owned subsidiary Simply Good Foods USA, Inc.

or one of its affiliates in the United States and elsewhere.

All rights are reserved.

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

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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 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.

In November 2024, the FASB issued ASU No.

2024-03, Comprehensive Income - Expense Disaggregation Disclosures (“ASU 2024-03”), which will improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions such as cost of sales, SG&A, and R&D.

The amendments are effective for fiscal years beginning after December 15, 2026.

Early adoption is permitted for annual financial statements that have not yet been issued or made available.

The amendments should be applied on either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements.

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

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

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.

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, as defined below, totaling $ 250.0 million and cash on hand.

Business transaction costs within the Consolidated Statements of Operations and Comprehensive Income for the thirteen week period ended November 30, 2024, were $ 0.6 million, which consisted of legal, 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.

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)

Prepaid assets 563

Property and equipment, net 136

Intangible assets, net (2)

Other long-term assets 6

Liabilities assumed:

Accounts payable 20,378

Other current liabilities 3,753

Deferred tax liability (3)

Total identifiable net assets 233,332

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 consisted 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:

Thirteen Weeks Ended

(In thousands) November 30, 2024

Net sales $ 32,254

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 2024, 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 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 2024:

Thirteen Weeks Ended

(In thousands) November 25, 2023

Net Sales $ 330,658

Net income $ 31,259

Revenue Recognition

1 unchanged sentence

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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(In thousands) May 25, 2024 May 27, 2023 May 25, 2024 May 27, 2023

Thirteen Weeks Ended

(In thousands) November 30, 2024 November 25, 2023

North America (1)

1 unchanged sentence

Quest 191,937 181,463

OWYN 32,254 —

Total North America 332,359 300,961

2 unchanged sentences

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

Charges related to credit losses on accounts receivable from transactions with external customers were immaterial and $( 0.2 ) million for the thirteen and thirty-nine weeks ended May 25, 2024, respectively.

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

As of May 25, 2024, and August 26, 2023, the allowance for credit losses related to accounts receivable was $ 0.6 million and $ 1.9 million, respectively.

Charges related to credit losses on accounts receivable from transactions with external customers were $ 0.8 million for the thirteen weeks ended November 30, 2024, and $ 0.1 million for the thirteen weeks ended November 25, 2023.

As of November 30, 2024, and August 31, 2024, the allowance for credit losses related to accounts receivable was $ 1.4 million and $ 0.7 million, respectively.

Goodwill and Intangibles

As of May 25, 2024, and August 26, 2023, Goodwill in the Consolidated Balance Sheets was $ 543.1 million.

There were no impairment charges related to goodwill during the thirteen and thirty-nine weeks ended May 25, 2024, or since the inception of the Company.

As of November 30, 2024, and August 31, 2024, Goodwill in the Consolidated Balance Sheets was $591.7 million.

There were no impairment charges related to goodwill during the thirteen weeks ended November 30, 2024, or since the inception of the Company.

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

November 30, 2024

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

19 unchanged sentences

$ 1,425,973 $ 89,507 $ 1,336,466

Changes in Intangible assets, net during the thirty-nine weeks ended May 25, 2024, were primarily related to recurring amortization expense.

Amortization expense related to intangible assets was $ 3.7 million and $ 3.9 million for the thirteen weeks ended May 25, 2024, and May 27, 2023, respectively, and $ 11.4 million and $ 11.8 million for the thirty-nine weeks ended May 25, 2024, and May 27, 2023, respectively.

During the thirteen weeks ended May 25, 2024, the Company conducted a quantitative impairment assessment over the Atkins brand indefinite lived intangible asset.

Based on our testing, the asset had an excess fair value well over its respective carrying value, resulting in no impairment.

There were no impairment charges related to its finite-lived intangible assets during the thirteen and thirty-nine weeks ended May 25, 2024 and May 27, 2023.

Changes in Intangible assets, net during the thirteen weeks ended November 30, 2024, were primarily related to recurring amortization expense.

Amortization expense related to intangible assets was $ 3.7 million for the thirteen weeks ended November 30, 2024, and $ 3.9 million for the thirteen weeks ended November 25, 2023.

There were no impairment charges related to its finite-lived intangible assets during the thirteen weeks ended November 30, 2024, and November 25, 2023.

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

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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.

The 2023 Repricing Amendment did not change the interest rate on the Revolving Credit Facility, which continues to bear interest based upon the Company’s consolidated net leverage ratio as of the end of the fiscal quarter for which consolidated financial statements are delivered to the Administrative Agent under the Credit Agreement.

No additional debt was incurred, or any proceeds received by the Company in connection with the 2023 Repricing Amendment.

No amounts under the Term Facility were repaid as a result of the execution of the 2023 Repricing Amendment.

Effective as of the 2023 Repricing Amendment, the interest rate per annum for the Initial Term Loans is based on either:

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:

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;

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 2023 Repricing Amendment, the Company expensed $ 2.4 million primarily for third-party fees and capitalized an additional $ 2.7 million primarily for the payment of upfront lender fees (original issue discount).

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.

2 unchanged sentences

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 are holding companies with no assets other than their investments in their respective subsidiaries.

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.

1 unchanged sentence

Any failure to comply with the restrictions of the credit facilities may result in an event of default.

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

The Company was in compliance with all covenants as of November 30, 2024 and August 31, 2024, respectively.

Long-term debt consists of the following:

(In thousands) May 25, 2024 August 26, 2023

Term Facility (effective rate of 7.9% at May 25, 2024)

(In thousands) November 30, 2024 August 31, 2024

Term Facility (effective rate of 7.2% at November 30, 2024)

$ 350,000 $ 400,000

Finance lease liabilities (effective rate of 5.6% at May 25, 2024)

Deferred financing fees 2,010 2,515

Total debt 237,663 281,792

Current finance lease liabilities 2 143

Long-term debt, net of deferred financing fees $ 347,990 $ 397,485

The Company is no t required to make principal payments on the Term Facility over the twelve months following the period ended May 25, 2024.

The Company is no t required to make principal payments on the Term Facility over the twelve months following the period ended November 30, 2024.

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

As of May 25, 2024, the Company had letters of credit in the amount of $ 3.2 million outstanding.

As of November 30, 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 as of May 25, 2024.

No amounts were drawn against these letters of credit as of November 30, 2024.

The Company utilizes market approaches to estimate the fair value of certain outstanding borrowings by discounting anticipated future cash flows derived from the contractual terms of the obligations and observable market interest and foreign exchange rates.

The Company carries debt at historical cost and discloses fair value.

As of May 25, 2024, and August 26, 2023, the book value of the Company’s debt approximated fair value.

As of November 30, 2024, and August 31, 2024, the book value of the Company’s debt approximated fair value.

The estimated fair value of the Term Loan is valued based on observable inputs and classified as Level 2 in the fair value hierarchy.

6 unchanged sentences

These valuations require significant judgment.

Components of the balance sheet such as accounts receivable, cash and cash equivalents and others approximated fair value as of May 25, 2024.

Components of the balance sheet such as accounts receivable, cash and cash equivalents, and others approximate fair value as of November 30, 2024.

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

Thirty-Nine Weeks Ended

(In thousands) May 25, 2024 May 27, 2023

Thirteen Weeks Ended

(In thousands) November 30, 2024 November 25, 2023

Income before income taxes $ 47,675 $ 47,108

1 unchanged sentence

Effective tax rate 20.0 % 24.5 %

The effective tax rate for the thirty-nine weeks ended May 25, 2024, was 0.7 % greater than the effective tax rate for the thirty-nine weeks ended May 27, 2023, which was primarily driven by permanent differences.

The effective tax rate for the thirteen weeks ended November 30, 2024, was 4.5 % lower than the effective tax rate for the thirteen weeks ended November 25, 2023, which was primarily driven by permanent differences, principally stock-based compensation.

The components of lease expense were as follows:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(In thousands) Statements of Operations Caption May 25, 2024 May 27, 2023 May 25, 2024 May 27, 2023

Thirteen Weeks Ended

(In thousands) Statements of Operations Caption November 30, 2024 November 25, 2023

Operating lease cost:

10 unchanged sentences

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

(In thousands) Balance Sheets Caption May 25, 2024 August 26, 2023

(In thousands) Balance Sheets Caption November 30, 2024 August 31, 2024

Operating lease right-of-use assets Other long-term assets $ 33,418 $ 35,097

Finance lease right-of-use assets Property and equipment, net 2 125

Total lease assets $ 33,418 $ 35,097

Operating lease liabilities Accrued expenses and other current liabilities $ 5,586 $ 5,494

Finance lease liabilities Current maturities of long-term debt 2 143

Operating lease liabilities Other long-term liabilities 33,117 34,330

Total lease liabilities $ 38,703 $ 39,824

Future maturities of lease liabilities as of May 25, 2024, were as follows:

(In thousands) Operating Leases Finance Leases

Future maturities of lease liabilities as of November 30, 2024, were as follows:

(In thousands) Operating Leases

Fiscal year ending:

5 unchanged sentences

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

May 25, 2024 August 26, 2023

November 30, 2024 August 31, 2024

Weighted-average remaining lease term (in years)

Operating leases 6.36 6.50

Finance leases 0.17 0.61

Weighted-average discount rate

Operating leases 5.1 % 5.1 %

Finance leases 5.6 % 5.6 %

Supplemental and other information related to leases was as follows:

Thirty-Nine Weeks Ended

(In thousands) May 25, 2024 May 27, 2023

Thirteen Weeks Ended

(In thousands) November 30, 2024 November 25, 2023

Cash paid for amounts included in the measurement of lease liabilities

6 unchanged sentences

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

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

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 the contracts in place and achievement of performance conditions as of May 25, 2024, the Company will be required to make payments of $ 1.2 million over the next year.

Based on the terms of contracts in place and achievement of performance conditions as of November 30, 2024, the Company will be required to make payments of $ 1.9 million over the next year.

Stockholders’ Equity

5 unchanged sentences

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

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

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

As of May 25, 2024, approximately $ 71.5 million remained available under the stock repurchase program.

The Company did not repurchase any shares of common stock during the thirteen weeks ended November 30, 2024, or the thirteen weeks ended November 25, 2023.

As of November 30, 2024, approximately $ 71.5 million remained available under the stock repurchase program.

Earnings Per Share

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The following table reconciles the numerators and denominators used in the computations of both basic and diluted earnings per share:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(In thousands, except per share data) May 25, 2024 May 27, 2023 May 25, 2024 May 27, 2023

Thirteen Weeks Ended

(In thousands, except per share data) November 30, 2024 November 25, 2023

Basic earnings per share computation:

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Diluted earnings per share from net income $ 0.38 $ 0.35

Diluted earnings per share calculations for the thirteen and thirty-nine weeks ended May 25, 2024 both excluded 0.8 million shares of common stock issuable upon exercise of stock options that would have been anti-dilutive.

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

Diluted earnings per share calculations for the thirteen and thirty-nine weeks ended May 25, 2024 and May 27, 2023 excluded an immaterial number of non-vested stock units that would have been anti-dilutive, respectively.

Diluted earnings per share calculations for the thirteen weeks ended November 30, 2024, and November 25, 2023, excluded 0.7 million and 0.8 million shares of common stock issuable upon exercise of stock options, respectively, that would have been anti-dilutive.

Diluted earnings per share calculations for the thirteen weeks ended November 30, 2024, and November 25, 2023, both excluded an immaterial number of non-vested stock units that would have been anti-dilutive.

Omnibus Incentive Plan

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

Stock-based compensation expense for equity-

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

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

Stock-based compensation expense is included within General and administrative expense, which is the same financial statement caption where recipient’s other compensation is reported.

The Company recorded stock-based compensation expense of $ 4.5 million and $ 4.1 million in the thirteen weeks ended May 25, 2024, and May 27, 2023, respectively, and $ 13.2 million and $ 10.5 million in the thirty-nine weeks ended May 25, 2024, and May 27, 2023, respectively.

The Company recorded stock-based compensation expense of $ 3.8 million and $ 4.2 million in the thirteen weeks ended November 30, 2024, and November 25, 2023, respectively.

Stock Options

The following table summarizes stock option activity for the thirty-nine weeks ended May 25, 2024:

The following table summarizes stock option activity for the thirteen weeks ended November 30, 2024:

Shares underlying options Weighted average

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Outstanding as of August 31, 2024 2,410,567 $ 20.75 4.39

Granted 17,633 33.02

Exercised ( 713,751 ) 13.99

Forfeited ( 15,186 ) 39.83

Outstanding as of May 25, 2024 2,419,262 $ 20.82 4.91

Vested and expected to vest as of May 25, 2024 2,419,262 $ 20.82 4.91

Exercisable as of May 25, 2024 1,934,142 $ 16.70 4.13

As of May 25, 2024, the Company had $ 3.1 million of total unrecognized compensation cost related to stock options that will be recognized over a weighted average period of 1.0 year.

During the thirty-nine weeks ended May 25, 2024, and May 27, 2023, the Company received $ 4.3 million and $ 5.0 million in cash from stock option exercises, respectively.

Outstanding as of November 30, 2024 1,681,630 $ 23.44 4.89

Vested and expected to vest as of November 30, 2024 1,681,630 $ 23.44 4.89

Exercisable as of November 30, 2024 1,485,031 $ 21.65 4.43

As of November 30, 2024, the Company had $ 1.8 million of total unrecognized compensation cost related to stock options that will be recognized over a weighted average period of 1.3 years.

During the thirteen weeks ended November 30, 2024, the Company received $ 10.0 million in cash from stock option exercises.

During the thirteen weeks ended November 25, 2023, the Company did no t receive cash from stock option exercises.

Restricted Stock Units

The following table summarizes restricted stock unit activity for the thirty-nine weeks ended May 25, 2024:

The following table summarizes restricted stock unit activity for the thirteen weeks ended November 30, 2024:

Units Weighted average

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Forfeited ( 10,637 ) 38.74

Non-vested as of May 25, 2024 502,286 $ 37.61

As of May 25, 2024, the Company had $ 12.3 million of total unrecognized compensation cost related to restricted stock units that will be recognized over a weighted average period of 1.6 years.

Non-vested as of November 30, 2024 610,481 $ 36.20

As of November 30, 2024, the Company had $ 18.9 million of total unrecognized compensation cost related to restricted stock units that will be recognized over a weighted average period of 2.1 years.

Performance Stock Units

During the thirty-nine weeks ended May 25, 2024, the Company granted performance stock units under its equity compensation plan.

Performance stock units vest in a range between 0 % and 200 % based upon certain performance criteria in a three -year period.

Performance stock units were valued using a Monte Carlo simulation.

The following table summarizes performance stock unit activity for the thirty-nine weeks ended May 25, 2024:

During the thirteen weeks ended November 30, 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 market-based criteria, performance-based criteria, or a combination of market-based criteria and performance-based criteria.

The number of shares may be increased or decreased based on the results of these metrics in accordance with the terms established at the date of grant.

For market-based criteria awards, the Company’s relative total shareholder return, or relative TSR, is 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 relative to that of the peer group determines the percent of the target award earned, ranging between 0 % and 200 %.

The related compensation expense is recognized ratably over the term regardless of whether or not the market condition is satisfied, provided the requisite service is rendered.

These units are valued using a Monte Carlo simulation.

For Company financial performance-based criteria awards, we estimate the probability that the Company’s internally established performance criteria will be achieved at each reporting period and adjust compensation expense accordingly.

The performance metrics achieved determines the percent of the target award earned, ranging between 0% and 200%.

These units are valued using the closing market price of the Company’s common stock on the date of grant.

For market-based criteria and Company financial performance-based criteria awards, the Company’s TSR within the peer group and the performance metrics achieved determines the percent of the target award earned, ranging between 0% and 275%.

We estimate the probability that the performance criteria will be achieved at each reporting period and adjust compensation expense accordingly.

Should the performance-based criteria not be probable of being achieved, the compensation expense for the value of the award incorporating the market-based criteria is recognized ratably over the term, provided the requisite service is rendered.

These units are valued using a Monte Carlo simulation.

The following table summarizes performance stock unit activity for the thirteen weeks ended November 30, 2024:

Units Weighted average

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Forfeited ( 40,302 ) 53.77

Non-vested as of May 25, 2024 182,740 $ 59.06

As of May 25, 2024, the Company had $ 5.9 million of total unrecognized compensation cost related to performance stock units that will be recognized over a weighted average period of 1.7 years.

Non-vested as of November 30, 2024 281,403 $ 52.08

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 with a market-based TSR component 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:

Thirteen Weeks Ended Thirteen Weeks Ended

November 30, 2024 November 25, 2023

Expected volatility 31.38 % 33.96 %

Expected dividend yield — % — %

Expected performance term 2.93 2.93

Risk-free rate of return 4.14 % 4.62 %

Fair value $ 54.41 $ 57.43

As of November 30, 2024, the Company had $ 9.3 million of total unrecognized compensation cost related to performance stock units that will be recognized over an expected weighted average period of 2.2 years.

Stock Appreciation Rights

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

The SARs outstanding as of May 25, 2024, cliff vest two years from the date of grant and must be exercised within five years .

The following table summarizes SARs activity for the thirty-nine weeks ended May 25, 2024:

The SARs outstanding as of November 30, 2024, cliff vested two years from the date of grant and must be exercised within five years from the date of grant.

The following table summarizes SARs activity for the thirteen weeks ended November 30, 2024:

Shares underlying SARs Weighted average

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Forfeited — —

Outstanding as of May 25, 2024 150,000 $ 37.67

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

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

Outstanding as of November 30, 2024 150,000 $ 37.67

Vested and expected to vest as of November 30, 2024 150,000 $ 37.67

Exercisable as of November 30, 2024 150,000 $ 37.67

The SARs outstanding as of the thirteen weeks ended November 30, 2024, are liability-classified;

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

Subsequent Events

Only What You Need, Inc.

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 “Acquisition”), for approximately $ 280.0 million.

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

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 acquisition of OWYN on June 13, 2024.

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

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements