What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-10 compared with 2025-04-09 · 86 added, 85 removed, 218 unchanged (44% of the section changed)

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Factors that could cause such differences include those identified in Item 1A.

“Risk Factors” of our Annual Report.

“Risk Factors” of our Annual Report and this Report.

The Company assumes no obligation to update any of these forward-looking statements.

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

The product portfolio we develop, market and sell consists primarily of protein bars, ready-to-drink (“RTD”) shakes, sweet and salty snacks and confectionery products marketed under the Quest, Atkins, and OWYN brand names.

The product portfolio we develop, market and sell consists primarily of protein bars, ready-to-drink (“RTD”) beverages, sweet and salty snacks and confectionery products marketed under the Quest, Atkins, and OWYN brand names.

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

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Business Trends

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.

During the thirteen and thirty-nine weeks ended May 31, 2025, our business performance improved principally due to the OWYN Acquisition and Quest volume growth, which more than offset continued softness in Atkins.

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 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.

We continue to monitor macroeconomic trends and uncertainties such as consumer and economic uncertainty, key ingredient inflation, supply chain challenges, and the effects of tariffs, which may have adverse effects on net sales and profitability.

Based on analysis of the potential effects of these factors, our net sales and profitability are in line with expectations for fiscal year 2025.

We are continuing to evaluate these factors and our ability to potentially offset all or a portion of cost increases through pricing actions and cost savings efforts for fiscal year 2026.

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

Key Financial Definitions

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Results of Operations

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.

During the thirteen weeks ended May 31, 2025, our net sales increased 13.8% to $381.0 million compared to $334.8 million for the thirteen weeks ended May 25, 2024, driven primarily by the OWYN Acquisition and Quest volume growth, which more than offset continued softness in Atkins.

Gross profit increased during the quarter, driven by higher sales volumes, while gross margin decreased 350 basis points primarily as a result of unfavorable commodity expenses compared to the prior year period and 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 March 1, 2025, and the Thirteen Weeks Ended February 24, 2024

Comparison of Unaudited Results for the Thirteen Weeks Ended May 31, 2025, and the Thirteen Weeks Ended May 25, 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) March 1, 2025 % of Net Sales February 24, 2024 % of Net Sales

(In thousands) May 31, 2025 % of Net Sales May 25, 2024 % of Net Sales

Net sales $ 380,956 100.0 % $ 334,757 100.0 %

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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 $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.

Net sales were $381.0 million for the thirteen weeks ended May 31, 2025, compared to $334.8 million for the thirteen weeks ended May 25, 2024, representing an increase of $46.2 million, or 13.8%, driven primarily by the OWYN Acquisition and Quest volume growth, which more than offset continued softness in Atkins.

North America net sales increased 14.3% in the thirteen weeks ended May 31, 2025, compared to the thirteen weeks ended May 25, 2024, and International net sales decreased $0.7 million during the same period.

Cost of goods sold .

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.

Cost of goods sold increased $41.3 million, or 20.5%, for the thirteen weeks ended May 31, 2025, compared to the thirteen weeks ended May 25, 2024.

The cost of goods sold increase was driven by higher sales volumes, primarily as a result of the OWYN Acquisition and growth for Quest, and higher ingredient and packaging costs compared to the prior year period.

Gross profit.

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.

Gross profit increased $4.9 million, or 3.7%, to $138.5 million for the thirteen weeks ended May 31, 2025, compared to the thirteen weeks ended May 25, 2024.

Gross profit margin was 36.4% of net sales for the thirteen weeks ended May 31, 2025, a decrease of 350 basis points from 39.9% of net sales for the thirteen weeks ended May 25, 2024.

The decrease in gross profit margin was primarily driven by unfavorable commodity expenses compared to the prior year period and lower gross profit margins of the OWYN business.

Operating expenses .

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:

Operating expenses increased $4.3 million, or 5.8%, for the thirteen weeks ended May 31, 2025, compared to the thirteen weeks ended May 25, 2024, due to the following:

• Selling and marketing.

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.

Selling and marketing expenses decreased $2.7 million, or 7.3%, for the thirteen weeks ended May 31, 2025, compared to the thirteen weeks ended May 25, 2024, driven primarily by a decrease in marketing spend on the legacy business and partially offset by the OWYN Acquisition.

• General and administrative.

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.

General and administrative expenses increased $9.7 million, or 30.7%, for the thirteen weeks ended May 31, 2025, compared to the thirteen weeks ended May 25, 2024.

The increase in general and administrative expenses was driven by an increase of $5.2 million in integration costs and $3.2 million in employee-related costs primarily attributable to OWYN, and higher corporate expenses.

• Depreciation and amortization.

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.

Depreciation and amortization expense was $4.2 million for the thirteen weeks ended May 31, 2025, and $4.1 million for the thirteen weeks ended May 25, 2024, respectively.

• Business transaction costs.

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.

Business transaction costs were zero for the thirteen weeks ended May 31, 2025, compared to $2.7 million for the thirteen weeks ended May 25, 2024, and were comprised of expenses related to the OWYN Acquisition.

Interest income.

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

Interest income decreased $0.2 million for the thirteen weeks ended May 31, 2025, compared to the thirteen weeks ended May 25, 2024.

Interest expense .

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.

Interest expense decreased $0.1 million for the thirteen weeks ended May 31, 2025, compared to the thirteen weeks ended May 25, 2024, primarily due to principal payments reducing the outstanding balance of the Term Facility (as defined below) to $250.0 million subsequent to the incremental borrowing associated with the OWYN Acquisition on June 13, 2024.

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.

Foreign currency transactions resulted in a $0.3 million loss and an immaterial loss for the thirteen weeks ended May 31, 2025, and May 25, 2024, respectively.

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

Income tax expense.

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.

Income tax expense was $13.6 million for the thirteen weeks ended May 31, 2025, compared to $13.4 million during the thirteen weeks ended May 25, 2024.

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

Net income was $41.1 million for the thirteen weeks ended May 31, 2025, a decrease of $0.2 million, compared to net income of $41.3 million for the thirteen weeks ended May 25, 2024.

Net income was benefited by higher income from operations and was offset by higher other expense and income tax expense.

Adjusted EBITDA.

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.

Adjusted EBITDA increased $2.0 million, or 2.8%, for the thirteen weeks ended May 31, 2025, compared to the thirteen weeks ended May 25, 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

Comparison of Unaudited Results for the Thirty-Nine Weeks Ended May 31, 2025, and the Thirty-Nine Weeks Ended May 25, 2024

Twenty-Six Weeks Ended Twenty-Six Weeks Ended

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

Thirty-Nine Weeks Ended Thirty-Nine Weeks Ended

(In thousands) May 31, 2025 % of Net Sales May 25, 2024 % of Net Sales

Net sales $ 1,081,879 100.0 % $ 955,634 100.0 %

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

Net sales of $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.

Net sales were $1,081.9 million for the thirty-nine weeks ended May 31, 2025, compared to $955.6 million for the thirty-nine weeks ended May 25, 2024, representing an increase of $126.2 million, or 13.2%, driven primarily by the OWYN Acquisition and Quest volume growth, which more than offset continued softness in Atkins.

North America net sales increased 13.7% in the thirty-nine weeks ended May 31, 2025, compared to the thirty-nine weeks ended May 25, 2024, and International net sales decreased $1.6 million during the same period.

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.

Cost of goods sold increased $92.7 million, or 15.7%, for the thirty-nine weeks ended May 31, 2025, compared to the thirty-nine weeks ended May 25, 2024.

The cost of goods sold increase was driven by higher sales volumes, primarily as a result of the OWYN Acquisition and growth for Quest, 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 compared to the prior year to date period.

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.

Gross profit increased $33.5 million, or 9.2%, to $399.1 million for the thirty-nine weeks ended May 31, 2025, compared to the thirty-nine weeks ended May 25, 2024.

Gross profit margin was 36.9% of net sales for the thirty-nine weeks ended May 31, 2025, a decrease of 140 basis points from 38.3% of net sales for the thirty-nine weeks ended May 25, 2024.

The decrease in gross profit margin was primarily driven by lower gross profit margins of the OWYN business, partially offset by favorable commodity expenses compared to the prior year to date period, 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:

Operating expenses increased $23.5 million, or 11.4%, for the thirty-nine weeks ended May 31, 2025, compared to the thirty-nine weeks ended May 25, 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.

Selling and marketing expenses decreased $1.2 million, or 1.2%, for the thirty-nine weeks ended May 31, 2025, compared to the thirty-nine weeks ended May 25, 2024, driven primarily by a decrease in marketing spend on the legacy business and partially offset by the OWYN Acquisition.

• 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.

General and administrative expenses increased $26.9 million, or 30.4%, for the thirty-nine weeks ended May 31, 2025, compared to the thirty-nine weeks ended May 25, 2024.

The increase in general and administrative expense was driven by an increase of $12.1 million in integration costs and $9.2 million in employee-related costs primarily attributable to OWYN, 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.

Depreciation and amortization expense was $12.5 million and $12.7 million for the thirty-nine weeks ended May 31, 2025, compared to the thirty-nine weeks ended May 25, 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.

Business transaction costs were $0.8 million for the thirty-nine weeks ended May 31, 2025, compared to $2.7 million for the thirty-nine weeks ended May 25, 2024, 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 income decreased by $0.7 million for the thirty-nine weeks ended May 31, 2025, compared to the thirty-nine weeks ended May 25, 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.

Interest expense increased $2.4 million for the thirty-nine weeks ended May 31, 2025, compared to the thirty-nine weeks ended May 25, 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 $250.0 million subsequent to the borrowing as of May 31, 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.

Foreign currency transactions resulted in a $0.3 million loss and a $0.2 million gain for the thirty-nine weeks ended May 31, 2025, and May 25, 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.

Income tax expense was $35.4 million for the thirty-nine weeks ended May 31, 2025, compared to $35.2 million during the thirty-nine weeks ended May 25, 2024.

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

Net income was $116.0 million for the thirty-nine weeks ended May 31, 2025, an increase of $6.0 million compared to net income of $110.0 million for the thirty-nine weeks ended May 25, 2024.

Net income was benefited by higher gross profit and income from operations and was partially offset by higher interest expense.

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.

Adjusted EBITDA increased $20.2 million, or 10.6% for the thirty-nine weeks ended May 31, 2025, compared to the thirty-nine weeks ended May 25, 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.

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

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

The following unaudited table provides a reconciliation of EBITDA and Adjusted EBITDA to its most directly comparable GAAP measure, which is net income, for the thirteen and thirty-nine weeks ended May 31, 2025, and May 25, 2024:

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

May 31, 2025 May 25, 2024 May 31, 2025 May 25, 2024

Net income $ 41,102 $ 41,334 $ 115,971 $ 110,018

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

We had $98.0 million in cash as of May 31, 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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Debt and Credit Facilities

On July 7, 2017, we entered into a credit agreement with Barclays Bank PLC and other parties (as amended to date, the “Credit Agreement”).

On July 7, 2017, the Company (through certain of its subsidiaries) 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.

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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 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.

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

At May 31, 2025, the outstanding balance of the Term Facility was $250.0 million.

We are not required to make principal payments on the Term Facility over the twelve months following the period ended May 31, 2025.

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

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

As of May 31, 2025, there were no amounts drawn against the Revolving Credit Facility.

OWYN Acquisition

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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.

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.

In the second fiscal quarter of 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 May 31, 2025.

Business transaction costs associated with the OWYN Acquisition within the Consolidated Statements of Operations and Comprehensive Income for the thirty-nine weeks ended May 31, 2025, were $0.8 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 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.

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.

During the thirteen and thirty-nine weeks ended May 31, 2025, the Company repurchased 693,375 shares of common stock at an average share price of $35.10 per share.

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

As of May 31, 2025, approximately $47.2 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):

Twenty-Six Weeks Ended

March 1, 2025 February 24, 2024

Thirty-Nine Weeks Ended

May 31, 2025 May 25, 2024

Net cash provided by operating activities

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Operating activities.

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.

Our net cash provided by operating activities decreased $33.7 million to $133.1 million for the thirty-nine weeks ended May 31, 2025, compared to $166.8 million for the thirty-nine weeks ended May 25, 2024.

The decrease in cash provided by operating activities was primarily attributable to changes in working capital for the thirty-nine weeks ended May 31, 2025, as compared to the thirty-nine weeks ended May 25, 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 building of inventory, which consumed cash of $29.9 million in the thirty-nine weeks ended May 31, 2025, compared to $6.8 million of cash provided in the thirty-nine weeks ended May 25, 2024, a difference of $36.7 million.

Income from operations increased by $10.0 million to $168.7 million for the thirty-nine weeks ended May 31, 2025, as compared to $158.7 million for the thirty-nine weeks ended May 25, 2024.

Additionally, cash paid for interest was $18.0 million in the thirty-nine weeks ended May 31, 2025, which was an increase of $2.0 million as compared to the $16.0 million paid for interest in the thirty-nine weeks ended May 25, 2024.

Investing activities .

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.

Our net cash used in investing activities was $2.2 million for the thirty-nine weeks ended May 31, 2025, compared to $2.3 million for the thirty-nine weeks ended May 25, 2024.

Our net cash used in investing activities for the thirty-nine weeks ended May 31, 2025, was primarily comprised of $2.5 million of purchases of property and equipment and $1.4 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 $2.3 million of net cash used in investing activities for the thirty-nine weeks ended May 25, 2024, was primarily comprised of $1.8 million of purchases of property and equipment.

Financing activities .

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.

Our net cash used in financing activities was $165.2 million for the thirty-nine weeks ended May 31, 2025, compared to $43.6 million for the thirty-nine weeks ended May 25, 2024.

Net cash used in financing activities for the thirty-nine weeks ended May 31, 2025, primarily consisted of $150.0 million in principal payments on the Term Facility, $24.3 million in repurchases of common stock, and $2.8 million in tax payments related to the issuance of restricted stock units and performance stock units, partially offset by $12.0 million of cash proceeds received from option exercises.

Net cash used in financing activities for the thirty-nine weeks ended May 25, 2024, primarily consisted of $45.0 million in principal payments on the Term Facility, and $4.8 million in tax payments related to issuance of restricted stock units and performance stock units, partially offset by $2.1 million of cash received on repayment of a note receivable and $4.3 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 March 1, 2025.

There were no material changes in our market risk exposure during the thirteen-week period ended May 31, 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