What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-09 compared with 2025-01-08 · 133 added, 66 removed, 170 unchanged (54% of the section changed)

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These statements relate to future events or our future financial or operational performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements.

These statements include, but are not limited to, our expectations regarding our supply chain, including but not limited to, raw materials and logistics costs, the effect of price increases, inflationary pressure on us and our contract manufacturers, our growth, our competitive position, and the unforeseen business disruptions or other effects due to current global geopolitical tension.

These statements include, but are not limited to, our expectations regarding our supply chain, including but not limited to, raw materials and logistics costs, the effect of price increases, inflationary pressure on us and our contract manufacturers, changes in taxes, tariffs, duties, governmental laws and regulations, our growth, our competitive position, and the unforeseen business disruptions or other effects due to current global geopolitical tension.

We disclaim any undertaking to publicly update or revise any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, except as required by applicable law.

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

To that end, in June 2024, we completed the acquisition of Only What You Need, Inc., a plant-based protein food company, for a cash purchase price of approximately $280.0 million (subject to customary adjustments).

To that end, in June 2024, we completed the acquisition of OWYN, a plant-based protein food company, for a cash purchase price of approximately $280.0 million (subject to customary adjustments).

For more information, please see “ Liquidity and Capital Resources-OWYN Acquisition ”.

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Business Trends

During the thirteen weeks ended November 30, 2024, our business performance improved principally due to the OWYN Acquisition.

We benefited from lower ingredient and packaging costs which resulted in gross margin expansion versus the year ago period.

During the thirteen and twenty-six weeks ended March 1, 2025, our business performance improved principally due to Quest volume growth and the OWYN Acquisition.

We expect fiscal year 2025 organic sales growth to be driven primarily by volume and have strong advertising and marketing plans in place, as well as innovation, merchandising and promotions that we believe should enable us to achieve our objectives.

We continue to engage and have discussions with our contract manufacturers and logistics and transportation providers to have our cost structure reflect lower market prices.

We continue to monitor key ingredient inflation which may affect profitability;

however, we believe our strategy and positioning will continue to drive profitable growth for our product offerings and growth within the growing nutritional snacking category.

We continue to monitor macroeconomic trends and uncertainties such as key ingredient inflation, the effects of recently implemented tariffs, and the potential imposition of modified or additional tariffs, which may have adverse effects on net sales and profitability.

As a result of the tariffs announced by the U.S.

presidential administration on April 2, 2025, and potential tariff modifications or the imposition of tariffs or export controls by other countries, we anticipate increased supply chain challenges, commodity cost volatility, and consumer and economic uncertainty due to rapid changes in global trade policies.

Based on preliminary analysis of the potential effects of the announced tariffs and these other factors, we do not expect these factors to result in a material negative effect on our net sales or profitability for the remainder of fiscal year 2025.

However, we are continuing to evaluate these factors and their potential effects as well as our ability to potentially offset all or a portion of cost increases through pricing actions and cost savings efforts for fiscal year 2026 planning.

Economic pressures on customers and consumers, including the challenges of high inflation and the effects of increased tariffs, may negatively affect our net sales and profitability in the future.

Key Financial Definitions

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• General and administrative.

General and administrative expenses are comprised of expenses associated with corporate and administrative functions that support our business, including employee compensation, stock-based compensation, professional services, executive transition costs, integration costs, restructuring costs, insurance and other general corporate expenses.

General and administrative expenses are comprised of expenses associated with corporate and administrative functions that support our business, including employee compensation, employee stock-based compensation, professional services, executive transition costs, integration costs, restructuring costs, insurance and other general corporate expenses.

• Depreciation and amortization.

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Results of Operations

During the thirteen weeks ended November 30, 2024, our net sales increased to $341.3 million compared to $308.7 million for the thirteen weeks ended November 25, 2023, driven by the OWYN Acquisition, resulting in a 10.4% increase in our aggregate North America net sales.

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

During the thirteen weeks ended March 1, 2025, our net sales increased 15.2% to $359.7 million compared to $312.2 million for the thirteen weeks ended February 24, 2024, driven by the OWYN Acquisition.

Gross profit increased during the quarter, driven by higher sales volumes, while gross margin decreased 120 basis points primarily as a result of the inclusion of OWYN.

We expect to see continued growth during fiscal year 2025 by building on our existing capabilities and strengthening the position of our brands in the marketplace.

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

Comparison of Unaudited Results for the Thirteen Weeks Ended November 30, 2024, and the Thirteen Weeks Ended November 25, 2023

Comparison of Unaudited Results for the Thirteen Weeks Ended March 1, 2025, and the Thirteen Weeks Ended February 24, 2024

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

Thirteen Weeks Ended Thirteen Weeks Ended

(In thousands) November 30, 2024 % of Net Sales November 25, 2023 % of Net Sales

(In thousands) March 1, 2025 % of Net Sales February 24, 2024 % of Net Sales

Net sales $ 359,655 100.0 % $ 312,199 100.0 %

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Interest expense (6,338) (1.8) % (5,596) (1.8) %

Gain on foreign currency transactions 120 — % 226 0.1 %

Loss on foreign currency transactions (125) — % (23) — %

Other income 19 — % — — %

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

Net sales were $341.3 million for the thirteen weeks ended November 30, 2024, compared to $308.7 million for the thirteen weeks ended November 25, 2023, representing an increase of $32.6 million, driven primarily by the OWYN Acquisition.

North America net sales increased 10.4% in the thirteen weeks ended November 30, 2024, compared to the thirteen weeks ended November 25, 2023, and International net sales increased 15.4% during the same period.

Net sales were $359.7 million for the thirteen weeks ended March 1, 2025, compared to $312.2 million for the thirteen weeks ended February 24, 2024, representing an increase of $47.5 million, or 15.2%, driven primarily by Quest volume growth and the OWYN Acquisition.

North America net sales increased 16.3% in the thirteen weeks ended March 1, 2025, compared to the thirteen weeks ended February 24, 2024, and International net sales decreased $2.1 million during the same period.

Cost of goods sold .

Cost of goods sold increased $17.2 million, or 8.9%, for the thirteen weeks ended November 30, 2024, compared to the thirteen weeks ended November 25, 2023.

The cost of goods sold increase was driven by higher sales volumes, primarily as a result of the OWYN Acquisition, the effect of the non-cash $1.0 million inventory step-up charge related to the OWYN Acquisition and was partially offset by lower ingredient and packaging costs.

Cost of goods sold increased $34.2 million, or 17.5%, for the thirteen weeks ended March 1, 2025, compared to the thirteen weeks ended February 24, 2024.

The cost of goods sold increase was driven by higher sales volumes, primarily as a result of growth for Quest and the OWYN Acquisition, and the effect of the non-cash $0.4 million inventory step-up charge related to the OWYN Acquisition, which were partially offset by lower ingredient and packaging costs.

Gross profit.

Gross profit increased $15.4 million, or 13.3%, for the thirteen weeks ended November 30, 2024, compared to the thirteen weeks ended November 25, 2023.

Additionally, gross profit of $130.5 million, or 38.2% of net sales, for the thirteen weeks ended November 30, 2024, increased 90 basis points from 37.3% of net sales for the thirteen weeks ended November 25, 2023.

The increase in gross profit margin was primarily driven by lower ingredient and packaging costs and was partially offset by the effect of the non-cash $1.0 million inventory step-up charge related to the OWYN Acquisition.

Gross profit increased $13.3 million, or 11.4%, to $130.1 million for the thirteen weeks ended March 1, 2025, compared to the thirteen weeks ended February 24, 2024.

Gross profit margin was 36.2% of net sales for the thirteen weeks ended March 1, 2025, a decrease of 120 basis points from 37.4% of net sales for the thirteen weeks ended February 24, 2024.

The decrease in gross profit margin is primarily driven by lower gross profit margins of the OWYN business and is inclusive of the effect of the non-cash $0.4 million inventory step-up charge related to the OWYN Acquisition.

Operating expenses .

Operating expenses increased $12.6 million, or 19.8%, for the thirteen weeks ended November 30, 2024, compared to the thirteen weeks ended November 25, 2023, due to the following:

Operating expenses increased $6.6 million, or 9.6%, for the thirteen weeks ended March 1, 2025, compared to the thirteen weeks ended February 24, 2024, due to the following:

• Selling and marketing.

Selling and marketing expenses increased $1.0 million, or 3.1%, for the thirteen weeks ended November 30, 2024, compared to the thirteen weeks ended November 25, 2023, primarily due to the OWYN Acquisition.

Selling and marketing expenses increased $0.4 million, or 1.3%, for the thirteen weeks ended March 1, 2025, compared to the thirteen weeks ended February 24, 2024, driven primarily by the OWYN Acquisition and partially offset by a decrease in marketing spend on the legacy business.

• General and administrative.

General and administrative expenses increased $11.1 million, or 41.2%, for the thirteen weeks ended November 30, 2024, compared to the thirteen weeks ended November 25, 2023.

The increase in general and administrative expenses was primarily attributable to an increase of $4.9 million in integration costs related to the OWYN Acquisition, an increase of $3.0 million in employee-related costs, and higher corporate expenses.

General and administrative expenses increased $6.1 million, or 20.3%, for the thirteen weeks ended March 1, 2025, compared to the thirteen weeks ended February 24, 2024.

The increase in general and administrative expenses was driven by an increase of $2.0 million in integration costs primarily attributable to OWYN, and $0.7 million in term loan transaction fees related to the 2025 Repricing Amendment, $0.4 million in stock-based compensation, and higher employee-related costs and corporate expenses.

• Depreciation and amortization.

Depreciation and amortization expense was $4.2 million for the thirteen weeks ended November 30, 2024, and $4.4 million for the thirteen weeks ended November 25, 2023, respectively.

Depreciation and amortization expense was $4.1 million for the thirteen weeks ended March 1, 2025, and $4.2 million for the thirteen weeks ended February 24, 2024, respectively.

• Business transaction costs.

Business transaction costs were $0.6 million for the thirteen weeks ended November 30, 2024 and were comprised of expenses related to the OWYN Acquisition.

Business transaction costs were $0.2 million for the thirteen weeks ended March 1, 2025 and were comprised of expenses related to the OWYN Acquisition.

Interest income.

Interest income decreased $0.3 million for the thirteen weeks ended November 30, 2024, compared to the thirteen weeks ended November 25, 2023.

Interest income decreased $0.2 million for the thirteen weeks ended March 1, 2025, compared to the thirteen weeks ended February 24, 2024.

Interest expense .

Interest expense increased $1.8 million for the thirteen weeks ended November 30, 2024, compared to the thirteen weeks ended November 25, 2023, primarily due to the effect of the incremental borrowing associated with the OWYN Acquisition on June 13, 2024, and principal payments reducing the outstanding balance of the Term Facility (as defined below) to $350.0 million subsequent to the borrowing as of November 30, 2024.

Gain on foreign currency transactions.

Foreign currency transactions resulted in a gain of $0.1 million and $0.2 million for the thirteen weeks ended November 30, 2024, and November 25, 2023, respectively.

Interest expense increased $0.7 million for the thirteen weeks ended March 1, 2025, compared to the thirteen weeks ended February 24, 2024, primarily due to the effect of the incremental borrowing associated with the OWYN Acquisition on June 13, 2024, and principal payments reducing the outstanding balance of the Term Facility (as defined below) to $300.0 million subsequent to the borrowing as of March 1, 2025.

Loss on foreign currency transactions.

Foreign currency transactions resulted in a loss of $0.1 million and an immaterial loss for the thirteen weeks ended March 1, 2025, and February 24, 2024, respectively.

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

Income tax expense.

Income tax expense decreased $2.0 million for the thirteen weeks ended November 30, 2024, compared to the thirteen weeks ended November 25, 2023.

The decrease in our income tax expense was primarily driven by changes in permanent differences, principally stock-based compensation.

Net income was $38.1 million for the thirteen weeks ended November 30, 2024, an increase of $2.6 million, compared to net income of $35.6 million for the thirteen weeks ended November 25, 2023.

Net income benefited from higher gross profit and a decrease in income tax expense of $2.0 million and was partially offset by $0.6 million of business transaction costs related to the OWYN Acquisition.

Income tax expense increased $2.0 million for the thirteen weeks ended March 1, 2025, compared to the thirteen weeks ended February 24, 2024.

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

Net income was $36.7 million for the thirteen weeks ended March 1, 2025, an increase of $3.6 million, compared to net income of $33.1 million for the thirteen weeks ended February 24, 2024.

Net income benefited from higher gross profit and income from operations, and was partially offset by an increase in income tax expense of $2.0 million.

Adjusted EBITDA.

Adjusted EBITDA increased $8.1 million, or 13.1%, for the thirteen weeks ended November 30, 2024, compared to the thirteen weeks ended November 25, 2023, driven primarily by higher gross profit.

Adjusted EBITDA increased $10.2 million, or 17.6%, for the thirteen weeks ended March 1, 2025, compared to the thirteen weeks ended February 24, 2024, driven primarily by higher gross profit.

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

Comparison of Unaudited Results for the Twenty-Six Weeks Ended March 1, 2025, and the Twenty-Six Weeks Ended February 24, 2024

Twenty-Six Weeks Ended Twenty-Six Weeks Ended

(In thousands) March 1, 2025 % of Net Sales February 24, 2024 % of Net Sales

Net sales $ 700,923 100.0 % $ 620,877 100.0 %

Cost of goods sold 440,300 62.8 % 388,889 62.6 %

Gross profit 260,623 37.2 % 231,988 37.4 %

Operating expenses:

Selling and marketing 68,072 9.7 % 66,633 10.7 %

General and administrative 74,077 10.6 % 56,883 9.2 %

Depreciation and amortization 8,308 1.2 % 8,569 1.4 %

Business transaction costs 820 0.1 % — — %

Total operating expenses 151,277 21.6 % 132,085 21.3 %

Income from operations 109,346 15.6 % 99,903 16.1 %

Other income (expense):

Interest income 1,477 0.2 % 2,014 0.3 %

Interest expense (14,199) (2.0) % (11,630) (1.9) %

(Loss) gain on foreign currency transactions (5) — % 203 — %

Other income 34 — % 6 — %

Total other income (expense) (12,693) (1.8) % (9,407) (1.5) %

Income before income taxes 96,653 13.8 % 90,496 14.6 %

Income tax expense 21,784 3.1 % 21,812 3.5 %

Net income $ 74,869 10.7 % $ 68,684 11.1 %

Other financial data:

Adjusted EBITDA (1)

$ 138,069 19.7 % $ 119,805 19.3 %

(1) Adjusted EBITDA is a non-GAAP financial metric.

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

Net sales of $700.9 million represented an increase of $80.0 million, or 12.9%, for the twenty-six weeks ended March 1, 2025, compared to the twenty-six weeks ended February 24, 2024, driven primarily by Quest volume growth and the OWYN Acquisition.

North America and International net sales increased 13.4% and decreased 5.8%, respectively, versus last year.

Cost of goods sold .

Cost of goods sold increased $51.4 million, or 13.2%, for the twenty-six weeks ended March 1, 2025, compared to the twenty-six weeks ended February 24, 2024.

The cost of goods sold increase was driven by higher sales volumes, primarily as a result of growth for Quest and the OWYN Acquisition, and the effect of the non-cash $1.4 million inventory step-up charge related to the OWYN Acquisition, which were partially offset by lower ingredient and packaging costs.

Gross profit.

Gross profit increased $28.6 million, or 12.3%, to $260.6 million for the twenty-six weeks ended March 1, 2025, compared to the twenty-six weeks ended February 24, 2024.

Gross profit margin was 37.2% of net sales for the twenty-six weeks ended March 1, 2025, a decrease of 20 basis points from 37.4% of net sales for the twenty-six weeks ended February 24, 2024.

The decrease in gross profit margin is primarily driven by lower gross profit margins of the OWYN business, partially offset by favorable commodity expenses, and is inclusive of the non-cash $1.4 million inventory step-up charge related to the OWYN Acquisition.

Operating expenses .

Operating expenses increased $19.2 million, or 14.5%, for the twenty-six weeks ended March 1, 2025, compared to the twenty-six weeks ended February 24, 2024, due to the following:

• Selling and marketing.

Selling and marketing expenses increased $1.4 million, or 2.2%, for the twenty-six weeks ended March 1, 2025, compared to the twenty-six weeks ended February 24, 2024, driven primarily by the OWYN Acquisition and partially offset by a decrease in marketing spend on the legacy business.

• General and administrative.

General and administrative expenses increased $17.2 million, or 30.2%, for the twenty-six weeks ended March 1, 2025, compared to the twenty-six weeks ended February 24, 2024.

The increase in general and administrative expense was driven by an increase of $6.9 million in integration costs and $6.1 million in employee-related costs primarily attributable to OWYN, and $0.7 million in term loan transaction fees related to the 2025 Repricing Amendment, and higher corporate expenses.

• Depreciation and amortization.

Depreciation and amortization expenses were $8.3 million and $8.6 million for the twenty-six weeks ended March 1, 2025, compared to the twenty-six weeks ended February 24, 2024, respectively.

• Business transaction costs.

Business transaction costs were $0.8 million for the twenty-six weeks ended March 1, 2025 and were comprised of expenses related to the OWYN Acquisition.

Interest income.

Interest income decreased by $0.5 million for the twenty-six weeks ended March 1, 2025, compared to the twenty-six weeks ended February 24, 2024, due to lower cash balances and the decrease of interest rates.

Interest expense .

Interest expense increased $2.6 million for the twenty-six weeks ended March 1, 2025, compared to the twenty-six weeks ended February 24, 2024, primarily due to the effect of the incremental borrowing associated with the OWYN Acquisition on June 13, 2024, and principal payments reducing the outstanding balance of the Term Facility (as defined below) to $300.0 million subsequent to the borrowing as of March 1, 2025.

(Loss) gain on foreign currency transactions.

Foreign currency transactions resulted in an immaterial loss and a $0.2 million gain for the twenty-six weeks ended March 1, 2025, and February 24, 2024, respectively.

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

Income tax expense.

Income tax expense was $21.8 million for the twenty-six weeks ended March 1, 2025, and the twenty-six weeks ended February 24, 2024, respectively.

Net income was $74.9 million for the twenty-six weeks ended March 1, 2025, an increase of $6.2 million compared to net income of $68.7 million for the twenty-six weeks ended February 24, 2024.

Net income was benefited by higher gross profit and income from operations and was partially offset by higher stock-based compensation expenses.

Adjusted EBITDA.

Adjusted EBITDA increased $18.3 million, or 15.2% for the twenty-six weeks ended March 1, 2025, compared to the twenty-six weeks ended February 24, 2024, driven primarily by higher net gross profit.

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

Reconciliation of EBITDA and Adjusted EBITDA

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

stock-based compensation expense, executive transition costs, business transaction costs, purchase price accounting, inventory step-up, integration costs, and other non-core expenses.

stock-based compensation expense, executive transition costs, business transaction costs, purchase price accounting, inventory step-up, integration costs, term loan transaction fees, and other non-core expenses.

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

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

The following unaudited table provides a reconciliation of EBITDA and Adjusted EBITDA to its most directly comparable GAAP measure, which is net income, for the thirteen weeks ended November 30, 2024, and November 25, 2023:

(In thousands) Thirteen Weeks Ended

November 30, 2024 November 25, 2023

The following unaudited table provides a reconciliation of EBITDA and Adjusted EBITDA to its most directly comparable GAAP measure, which is net income, for the thirteen and twenty-six weeks ended March 1, 2025, and February 24, 2024:

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

March 1, 2025 February 24, 2024 March 1, 2025 February 24, 2024

Net income $ 36,747 $ 33,123 $ 74,869 $ 68,684

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Integration of OWYN 1,955 — 6,886 —

Term loan transaction fees 715 — 715 —

65 25 (66) (201)

Adjusted EBITDA $ 68,001 $ 57,840 $ 138,069 $ 119,805

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

We had $121.8 million in cash as of November 30, 2024.

We had $103.7 million in cash as of March 1, 2025.

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

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

Effective as of the date of the 2024 Incremental Facility Amendment, the interest rate per annum for the Initial Term Loans is based on either:

On January 31, 2025, the Company entered into a seventh amendment (the “2025 Repricing Amendment”) to the Credit Agreement to reduce the interest rate per annum applicable to the Initial Term Loans outstanding under the Credit Agreement immediately prior to the effective date of the 2025 Repricing Amendment.

Effective as of the 2025 Repricing 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 1.00% plus (x) 1.00% 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 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.

SOFR, subject to a floor of 0.50%, plus (x) 2.00% margin for the Term Loan or (y) 3.00% margin for the Revolving Credit Facility.

In connection with the closing of the 2025 Repricing Amendment, the Company expensed $0.7 million of non-deferrable third-party costs through General and administrative .

The Simply Good Foods Company is not a borrower under the Credit Agreement and has not provided a guarantee of the Credit Agreement.

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

We were in compliance with all covenants as of November 30, 2024, and August 31, 2024, respectively.

At November 30, 2024, the outstanding balance of the Term Facility was $350.0 million.

We are not required to make principal payments on the Term Facility over the twelve months following the period ended November 30, 2024.

We were in compliance with all covenants as of March 1, 2025, and August 31, 2024, respectively.

At March 1, 2025, the outstanding balance of the Term Facility was $300.0 million.

We are not required to make principal payments on the Term Facility over the twelve months following the period ended March 1, 2025.

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

As of November 30, 2024, there were no amounts drawn against the Revolving Credit Facility.

As of March 1, 2025, there were no amounts drawn against the Revolving Credit Facility.

OWYN Acquisition

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.

entered into a Purchase Agreement to acquire OWYN, a plant-based protein food company, for approximately $280.0 million.

On June 13, 2024, pursuant to the Purchase Agreement, the Company completed the 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.

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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 associated with the OWYN Acquisition within the Consolidated Statements of Operations and Comprehensive Income for the thirteen weeks ended November 30, 2024, were $0.6 million, which consisted of legal, accounting, and other costs.

During the thirteen weeks ended March 1, 2025, the Company received a post-closing release from escrow of approximately $1.7 million related to net working capital adjustments, resulting in a total net consideration paid of $280.2 million as of March 1, 2025.

Business transaction costs associated with the OWYN Acquisition within the Consolidated Statements of Operations and Comprehensive Income for the thirteen weeks ended March 1, 2025, were $0.2 million, which consisted of legal, accounting, and other costs.

Stock Repurchase Program

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

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

As of November 30, 2024, approximately $71.5 million remained available for repurchases under our $150.0 million stock repurchase program.

The Company did not repurchase any shares of common stock during the twenty-six weeks ended March 1, 2025, and February 24, 2024.

As of March 1, 2025, approximately $71.5 million remained available for repurchases under our $150.0 million stock repurchase program.

Refer to Note 11, Stockholders’ Equity, of the Notes to Unaudited Consolidated Financial Statements in this Report for additional information related to our stock repurchase program.

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

Thirteen Weeks Ended

November 30, 2024 November 25, 2023

Twenty-Six Weeks Ended

March 1, 2025 February 24, 2024

Net cash provided by operating activities

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Operating activities.

Our net cash provided by operating activities decreased $15.5 million to $32.0 million for the thirteen weeks ended November 30, 2024, compared to $47.5 million for the thirteen weeks ended November 25, 2023.

The decrease in cash provided by operating activities was primarily attributable to changes in working capital for the thirteen weeks ended November 30, 2024, as compared to the thirteen weeks ended November 25, 2023.

Changes in working capital, comprised of changes in accounts receivable, net, inventories, prepaid expenses, other current assets, accounts payable, accrued interest, accrued expenses and other current liabilities, and other assets and liabilities, were driven by the timing of payments and receipts, the OWYN Acquisition, and the seasonal building of inventory, which consumed cash of $20.8 million in the thirteen weeks ended November 30, 2024 compared to $4.1 million of cash consumed in the thirteen weeks ended November 25, 2023, a difference of $16.6 million.

Income from operations increased by $2.8 million to $54.6 million for the thirteen weeks ended November 30, 2024, as compared to $51.8 million for the thirteen weeks ended November 25, 2023.

Additionally, cash paid for interest was $7.5 million in the thirteen weeks ended November 30, 2024, which was an increase of $5.4 million as compared to the $2.1 million paid for interest in the thirteen weeks ended November 25, 2023.

Our net cash provided by operating activities decreased $30.7 million to $63.3 million for the twenty-six weeks ended March 1, 2025, compared to $94.0 million for the twenty-six weeks ended February 24, 2024.

The decrease in cash provided by operating activities was primarily attributable to changes in working capital for the twenty-six weeks ended March 1, 2025, as compared to the twenty-six weeks ended February 24, 2024.

Changes in working capital, comprised of changes in accounts receivable, net, inventories, prepaid expenses, other current assets, accounts payable, accrued interest, accrued expenses and other current liabilities, and other assets and liabilities, were driven by the timing of payments and receipts, the OWYN Acquisition and the seasonal building of inventory, which consumed cash of $41.6 million in the twenty-six weeks ended March 1, 2025, compared to $5.5 million of cash consumed in the twenty-six weeks ended February 24, 2024, a difference of $36.0 million.

Income from operations increased by $9.4 million to $109.3 million for the twenty-six weeks ended March 1, 2025, as compared to $99.9 million for the twenty-six weeks ended February 24, 2024.

Additionally, cash paid for interest was $13.5 million in the twenty-six weeks ended March 1, 2025, which was an increase of $2.3 million as compared to the $11.2 million paid for interest in the twenty-six weeks ended February 24, 2024.

Investing activities .

Our net cash used in investing activities was $0.7 million for the thirteen weeks ended November 30, 2024, compared to $0.8 million for the thirteen weeks ended November 25, 2023.

Our net cash used in investing activities for the thirteen weeks ended November 30, 2024, was primarily comprised of $0.3 million of purchases of property and equipment and $0.4 million of investments in intangible and other assets.

The $0.8 million of net cash used in investing activities for the thirteen weeks ended November 25, 2023, was primarily comprised of $0.7 million of purchases of property and equipment.

Our net cash used in investing activities was immaterial for the twenty-six weeks ended March 1, 2025, compared to net cash used in investing activities of $1.3 million for the twenty-six weeks ended February 24, 2024.

Our net cash used investing activities for the twenty-six weeks ended March 1, 2025, was primarily comprised of $0.8 million of purchases of property and equipment and $0.9 million of investments in intangible and other assets, and was offset by $1.7 million of cash proceeds received from escrow related to net working capital adjustments related to the OWYN Acquisition.

The $1.3 million of net cash used in investing activities for the twenty-six weeks ended February 24, 2024, was primarily comprised of $1.1 million of purchases of property and equipment.

Financing activities .

Our net cash used in financing activities was $42.3 million for the thirteen weeks ended November 30, 2024, compared to $13.1 million for the thirteen weeks ended November 25, 2023.

Net cash used in financing activities for the thirteen weeks ended November 30, 2024, primarily consisted of $50.0 million in principal payments on the Term Facility, and $2.3 million in tax payments related to the issuance of restricted stock units and performance stock units, partially offset by $10.0 million of cash proceeds received from option exercises.

Net cash used in financing activities for the thirteen weeks ended November 25, 2023, primarily consisted of $10.0 million in principal payments on the Term Facility, and $3.6 million in tax payments related to issuance of restricted stock units and performance stock units, partially offset by $0.6 million of cash received on repayment of a note receivable.

Our net cash used in financing activities was $92.4 million for the twenty-six weeks ended March 1, 2025, compared to $44.7 million for the twenty-six weeks ended February 24, 2024.

Net cash used in financing activities for the twenty-six weeks ended March 1, 2025, primarily consisted of $100.0 million in principal payments on the Term Facility, and $2.5 million in tax payments related to the issuance of restricted stock units and performance stock units, partially offset by $10.1 million of cash proceeds received from option exercises.

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

New Accounting Pronouncements

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Quantitative and Qualitative Disclosures about Market Risk

There were no material changes in our market risk exposure during the thirteen-week period ended November 30, 2024.

There were no material changes in our market risk exposure during the thirteen-week period ended March 1, 2025.

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

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What changed 10-Q

Item 2. Management’s Discussion and Analysis