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What changed in Simply Good Foods Co's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Simply Good Foods Co's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+326 added−334 removedSource: 10-K (2024-10-29) vs 10-K (2023-10-24)

Top changes in Simply Good Foods Co's 2024 10-K

326 paragraphs added · 334 removed · 257 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

77 edited+30 added−34 removed67 unchanged
Biggest changeWe hold an ISO 22000 certification for our U.S. operations, which we first obtained during fiscal year 2022. International . Our products are also sold outside North America. Our top international sales are in Australia and New Zealand. For the fifty-two weeks ended August 26, 2023, international net sales represented approximately 2.7% of total net sales.
Biggest changeOur top international sales are in Australia and New Zealand. For the fifty-three weeks ended August 31, 2024, international net sales represented approximately 2.5% of total net sales. For products that are not manufactured in North America and shipped internationally, our international supply chain is run by a lean team solely focused on international operations.
The product portfolio we develop, market and sell consists primarily of protein bars, ready-to-drink (“RTD”) shakes, sweet and salty snacks and confectionery products marketed under the Quest® and Atkins® brand names. 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 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. Simply Good Foods is poised to expand its wellness platform through innovation and organic growth along with acquisition opportunities in the nutritional snacking space.
Our in-house research and development laboratories allow us to develop new products internally and bring them to market quickly through our contract manufacturing network without diverging from high standards of taste, nutritional content, quality, and safety. Additionally, we intend to satisfy developing and changing consumer preferences through the pursuit of merger and acquisition transactions.
Our in-house research and development laboratories allow us to develop new products internally and bring them to market quickly through our contract manufacturing network without diverging from high standards of taste, nutritional content, quality, and safety. Additionally, we intend to satisfy developing and changing consumer preferences through the continued pursuit of merger and acquisition transactions.
Department of Health and Human Services’ Dietary Guidelines for Americans (the “Dietary Guidelines”), which is released every five years. Our goal is to expand the Dietary Guidelines to offer solutions for more Americans, including the more than half of the U.S. population suffering from negative metabolic-related conditions such as cardiovascular disease, prediabetes, diabetes and obesity.
Department of Health and Human Services’ Dietary Guidelines for Americans (the “Dietary Guidelines”), which is released every five years. Our goal is to expand the Dietary Guidelines to offer solutions for more Americans, including the more than half of the U.S. population suffering from negative metabolic-related conditions such as cardiovascular disease, prediabetes, 15 diabetes and obesity.
For both brands, we have built large consumer followings. Beyond the core historic consumers for each of our brands, we believe there is significant opportunity to increase household penetration for our products by expanding our marketing, product offerings and educational efforts to consumers who are focused more generally on long-term healthy living.
We have built large consumer followings for our brands. Beyond the core historic consumers for each of our brands, we believe there is significant opportunity to increase household penetration for our products by expanding our marketing, product offerings and educational efforts to consumers who are focused more generally on long-term healthy living.
As part of this approach, over time, for those consumers who have elected to use weight 8 management medications to pursue their weight management goals we expect to develop and enhance our marketing messages regarding how we believe our products can be used to meet their snacking use occasions and be complementary to their use of medication for weight management to achieve and maintain their weight management goals.
As part of this approach, over time, for those consumers who have elected to use weight management medications to pursue their weight management goals we expect to develop and enhance our marketing messages regarding how we believe our products can be used to meet their snacking use occasions and be complementary to their use of medication for weight management to achieve and maintain their weight management goals.
Labeling Regulations We are subject to various labeling requirements with respect to our products at the federal, state and local levels. At the federal level the FDA has authority to review product labeling, and the FTC may review labeling and advertising materials, including online and television advertisements, to determine if advertising materials are misleading.
Labeling Regulations We are subject to various labeling requirements with respect to our products at the federal, state and local levels. At the federal level the FDA has authority to review product labeling, and the FTC may review labeling and advertising materials, including online and television 13 advertisements, to determine if advertising materials are misleading.
The website operations of our third parties may be affected by reliance on other third-party hardware and software providers, technology changes, risks related to the failure of computer systems through which these website operations are conducted, telecommunications failures, data security breaches and similar disruptions. 11 Segments During the fifty-two weeks ended August 27, 2022, we substantially completed our efforts to fully integrate our operations and organization structure after the Quest Acquisition.
The website operations of our third parties may be affected by reliance on other third-party hardware and software providers, technology changes, risks related to the failure of computer systems through which these website operations are conducted, telecommunications failures, data security breaches and similar disruptions. 12 Segments During the fifty-two weeks ended August 27, 2022, we substantially completed our efforts to fully integrate our operations and organization structure after the Quest Acquisition.
We believe snacking occasions have been on the rise in recent years as consumers continue to desire more convenient, healthy and delicious foods, snacks, and meal replacements. We believe our emphasis on product formats such as our protein bars, cookies, chips and salty snacks, and RTD shakes positions us to fill important needs for consumers.
We believe snacking occasions have been on the rise in recent years as consumers continue to desire more convenient, healthy and delicious foods, snacks, and meal replacements. We believe our emphasis on product formats such as our protein bars, cookies, chips and salty snacks, confections, RTD shakes, and protein powders positions us to fill important needs for consumers.
For the majority of our customers, our logistics provider distributes the finished goods via truckloads from our Distribution Centers, which first flow through regional terminals. At the terminals, our orders are consolidated with other companies’ 10 products being shipped to the customer. The finished goods are then distributed to retailer distribution centers.
For the majority of our customers, our logistics provider distributes the finished goods via truckloads from our Distribution Centers, which first flow through regional terminals. At the terminals, our orders are consolidated with other companies’ products being shipped to the customer. The finished goods are then distributed to retailer customers’ distribution centers.
We are not, however, including the information contained on our website, or information that may be accessed through links on our website, as part of, or incorporating such information by reference into, this Report. 15
We are not, however, including the information contained on our website, or information that may be accessed through links on our website, as part of, or incorporating such information by reference into, this Report. 16
Leverage platform to expand in attractive food and snacking categories . We believe the fragmented snacking category presents an opportunity for consolidation and the opportunity to build, through disciplined acquisitions, a leading platform in the nutritional snacking space.
Leverage platform to expand in attractive food and snacking categories . We believe the fragmented snacking category presents an opportunity for growth and the opportunity to build, through disciplined acquisitions, a leading platform in the nutritional snacking space.
Increasing global concern about growing rates of obesity and weight-related diseases and other health issues has resulted in increased scientific, media and consumer focus on nutrition. Over 100 independent, peer reviewed, clinical studies show the benefits of controlling carbohydrates. We believe this focus is prompting consumers to rebalance their nutritional breakdown away from carbohydrates.
Aligned with consumer mega trends. Increasing global concern about growing rates of obesity and weight-related diseases and other health issues has resulted in increased scientific, media and consumer focus on nutrition. Over 100 independent, peer reviewed, clinical studies show the benefits of controlling carbohydrates. We believe this focus is prompting consumers to rebalance their nutritional breakdown away from carbohydrates.
We recognize the importance of a diverse, equitable and inclusive culture for our employees and its effect on our ability to achieve our mission, so we have made commitments to track and improve our performance in each of these areas.
We recognize the importance of a diverse, equitable and inclusive culture for our employees and its effect on our ability to achieve our business objectives, so we have made commitments to track and improve our performance in each of these areas.
We regularly ask our employees to respond to engagement surveys to gather feedback on topics ranging from teamwork to, growth, job satisfaction, engagement and inclusion. This encourages open communication with employees and management, and tracks employee engagement over time. Total Rewards.
We regularly ask our employees to respond to engagement surveys to gather feedback on topics including teamwork, growth, job satisfaction, engagement and inclusion. This encourages open communication with employees and management, and tracks employee engagement over time. Total Rewards.
We believe a number of existing and emerging consumer trends within the U.S. food and beverage industry will continue to both drive the growth of the nutritional snacking category and increase the demand for our product offerings.
We believe several existing and emerging consumer trends within the U.S. food and beverage industry will continue to drive both the growth of the nutritional snacking category and increase the demand for our product offerings.
We also believe our portfolio of convenient and nutritious products and our ongoing effort to meet consumer demands for convenient snacking options support their individual health, nutrition and lifestyle goals. Scalable snacking and food platform. We have been able to grow our product offerings for both of our nutritious snacking brands through our line extensions and through acquisitions.
We also 6 believe our portfolio of convenient and nutritious products and our ongoing effort to meet consumer demands for convenient snacking options support their individual health, nutrition, allergen sensitivities, and lifestyle goals. Scalable snacking and food platform. We have been able to grow our product offerings for our nutritious snacking brands through our line extensions and through acquisitions.
The contract manufacturers schedule and receive ingredient and packaging inventory according to parameters set in their contracts and forecasts we provide. As noted above, some ingredients and packaging are purchased by our contract manufacturers pursuant to framework contracts we have with the applicable suppliers.
We rely on contract manufacturers to manufacture our products. The contract manufacturers schedule and receive ingredient and packaging inventory according to parameters set in their contracts and forecasts we provide. As noted above, some ingredients and packaging are purchased by our contract manufacturers pursuant to framework contracts we have with the applicable suppliers.
Some of these trends include increased consumption of smaller, more frequent meals throughout the day, consumers’ strong preference for convenient, “better-for-you” snacks, consumers’ greater focus on health and wellness, consumers’ movement toward limiting carbohydrate and sugar consumption, and the trend of consumers seeking to add convenient sources of protein and fiber to their diets.
Some of these trends include increased consumption of smaller, more frequent meals throughout the day, consumers’ strong preference for convenient, “better-for-you” snacks, consumers’ greater focus on health and wellness, consumers seeking to add convenient sources of protein and fiber to their diets, and consumers’ movement toward limiting carbohydrate and sugar consumption or avoiding certain allergens.
Our contract manufacturers are regularly audited by third parties and are required to follow rigorous food safety guidelines. We believe our contract manufacturers have capacity to meet our anticipated supply needs, although short-term high demand can cause disruptions.
Our contract manufacturers are regularly audited by third parties and are required to follow rigorous food safety guidelines. We believe our contract manufacturers have capacity to meet our anticipated supply needs, although short-term high demand or production equipment issues can cause disruptions.
The table below provides information as of August 26, 2023, the end of our fiscal year, about the representation of women and minorities as a percentage of our employees at various levels of management categories used by our Executive Leadership Team to manage our workforce.
The table below provides information as of August 31, 2024, the end of our fiscal year, about the representation of women and minorities as a percentage of our employees at various levels of management categories used by our Executive Leadership Team to manage our workforce.
We believe we can leverage our strong relationships with our retail customers and distributors, a strong brand building track record, and category management expertise to help new products, brands and brand extensions gain distribution and consumer recognition, allowing us to continue to successfully expand our snacking platform. Asset-light business with strong cash generation .
We believe we can leverage our strong relationships with our retail customers and distributors, a strong brand building track record, and category management expertise to help new products, brands and brand extensions gain distribution and consumer recognition, allowing us to continue to successfully expand our snacking platform.
We use coupons (freestanding insert newspaper, store register, on-pack and online coupons) to help stimulate product trial and repeat purchases by providing consumers with economic incentives. The mix of these marketing activities varies between the Quest and Atkins brands.
We use coupons (freestanding insert newspaper, store register, on-pack and online coupons) to help stimulate product trial and repeat purchases by providing consumers with economic incentives. The mix of these marketing activities varies among our brands.
We are also subject to various state and local consumer protection laws. We believe we are in material compliance with all labeling laws and regulations applicable to our business. 12 Human Capital Resources As of August 26, 2023, our workforce consisted of 271 employees globally who were largely based in an office or in research and development (“R&D”) lab locations.
We are also subject to various state and local consumer protection laws. We believe we are in material compliance with all labeling laws and regulations applicable to our business. Human Capital Resources As of August 31, 2024, our workforce consisted of 316 employees globally who were largely based in an office or in research and development (“R&D”) lab locations.
We will continue to follow the progress of our past recipients and their effect on their communities. For the third year, we participated in Walmart’s “Fight Hunger. Spark Change.” campaign. For each purchase of participating Simply Good Foods’ Atkins and Quest products at Walmart during the campaign, we donated the monetary equivalent of at least one meal to Feeding America.
We will continue to follow the progress of our past recipients and their effect on their communities. Also in 2023, we participated in Walmart Inc.’s “Fight Hunger. Spark Change.” campaign. For each purchase of participating Simply Good Foods’ Quest and Atkins products at Walmart during the campaign, we donated the monetary equivalent of at least one meal to Feeding America.
For both brands, in order to facilitate awareness and knowledge of the health benefits of a low-carbohydrate, low-sugar and protein-rich eating approach, we have established a variety of marketing and advertising strategies to connect with consumers, including digital marketing and social media platforms, television broadcast and streaming advertising as well as celebrity and social media influencer endorsements.
For our brands, in order to facilitate awareness and knowledge of the health benefits of a low-carbohydrate, low-sugar and protein-rich eating approach, whether dairy or plant-based, we have established a variety of marketing and advertising strategies to connect with consumers, including digital marketing and social media platforms, television broadcast and streaming advertising as well as celebrity and social media influencer endorsements.
Our Board of Directors created its Corporate Responsibility & Sustainability committee that has been tasked with, among other things, overseeing human capital resources and all our DE&I initiatives.
Our Board of Directors created its Corporate Responsibility & Sustainability committee that has been tasked with, among other things, overseeing human capital resources and all our DEI&B initiatives.
The Simply Good Foods Company (“Simply Good Foods”) was formed on March 30, 2017, to acquire NCP-ATK Holdings, Inc. (“Atkins”), on July 7, 2017. As part of Simply Good Foods’ strategy to become an industry leading snacking platform, in November 2019, we acquired Quest Nutrition, LLC (“Quest”).
The Simply Good Foods Company (“Simply Good Foods”) was formed on March 30, 2017, to acquire NCP-ATK Holdings, Inc. (“Atkins”), on July 7, 2017. As part of Simply Good Foods’ strategy to become an industry leading snacking platform, in November 2019, we acquired Quest Nutrition, LLC (“Quest”) and we acquired Only What You Need, Inc. in June 2024.
We intend to expand our marketing efforts to bring first-time buyers into the Quest and Atkins brand franchises. For our Quest brand, our historic consumer base has been individuals pursuing a performance-based active and athletic lifestyle and for our Atkins’ brand it has been people interested in weight management.
We intend to expand our marketing efforts to bring first-time buyers into the Quest, Atkins and OWYN brand franchises. For our Quest brand, our historic consumer base has been individuals pursuing a performance-based active and athletic lifestyle. For our Atkins’ brand it has been people interested in weight management or pursuing a lifestyle of eating low carbohydrate foods.
Our management believes there is opportunity for the brands to further penetrate those channels as well as other 6 distribution channels such as convenience and club stores.
Our management believes there is opportunity for each of our brands to further penetrate those channels as well as other distribution channels such as convenience and club stores.
For additional information, please see the risk factor “ We rely on sales to a limited number of retailers for a substantial majority of our net sales, and losing one or more such retailers may materially harm our business.
No other customer represents more than 10% of sales. For additional information, please see the risk factor “ We rely on sales to a limited number of retailers for a substantial majority of our net sales, and losing one or more such retailers may materially harm our business.
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 and Atkins for those following a low-carbohydrate lifestyle or seeking to manage weight or blood sugar levels.
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.
Our Products Core Quest Products Our core Quest brand products consist of protein bars, cookies, salty snacks and confections. Protein Bars. To keep on-the-go consumers energized and fueled, our Quest bars offer a convenient and effective solution, providing consumers with protein, fiber and a delicious taste.
Core Atkins Products Our core Atkins brand products consist of protein bars, RTD shakes, confections, and cookies. Protein Bars. To keep on-the-go consumers energized and fueled, our Atkins bars offer a convenient and effective solution, providing consumers with protein, fiber and a delicious taste. RTD Shakes.
As part of our advocacy on the advantages of a protein-rich, low-carbohydrate, and low-sugar dietary approach, we have devoted portions of our respective brand websites and social media to promote consumer education, engagement, and dialogue about the benefits of 14 our nutritional approaches and how our products can fit within those approaches.
As part of our advocacy on the advantages of a protein-rich, low-carbohydrate, low-sugar dietary approach, and with respect to our OWYN brand, plant-based, diary free and allergen sensitive, we have devoted portions of our respective brand websites and social media to promote consumer education, engagement, and dialogue about the benefits of our nutritional approaches and how our products can fit within those approaches.
These initiatives include the following, among others: • In 2022, we established a Diversity, Equity, Inclusion and Belonging Council consisting of mid-level and senior leaders so our DE&I efforts are informed and led by a cross section of our leaders.
These initiatives include the following, among others: • A Diversity, Equity, Inclusion and Belonging Council consisting of mid-level and senior leaders so our DEI&B efforts are informed and led by a cross section of our leaders.
Supply Chain We operate an asset-light business model. For the manufacture of our products, we contract with contract manufacturers, and as a result, our operations are highly flexible and require minimal capital expenditure. The supply chain for our international business also uses exclusively contract manufacturers. U.S. Supply Chain .
We expect the industry we operate in to remain highly competitive for the foreseeable future. Supply Chain We operate an asset-light business model. For the manufacture of our products, we contract with contract manufacturers, and as a result, our operations are highly flexible and require minimal capital expenditure. The supply chain for our international business also uses exclusively contract manufacturers.
Over 110 Simply Good Foods employees volunteered, building awareness about nutrition security, and striving to help end hunger in the U.S. by centering this volunteer event around Community Gardens, a place where people come together to access affordable, healthy food options. Available Information We file annual, quarterly and current reports, proxy statements and other information with the SEC.
Over 110 Simply Good Foods employees volunteered, building awareness about nutrition security, and striving to help end hunger in the U.S. by centering this volunteer event around Community Gardens, a place where people come together to access affordable, healthy food options.
In the fifty-two weeks ended August 26, 2023, approximately 77% of Quest’s gross sales in the U.S. and approximately 86% of Atkins’ gross sales in the U.S. were through the mass retailer, grocery and convenience store distribution channels.
In the fifty-three weeks ended August 31, 2024, approximately 77% of Quest’s gross sales in the U.S. and approximately 83% of Atkins’ gross sales in the U.S. were through the mass retailer, grocery and convenience store distribution channels.
In addition, while shoppers have increased e-commerce purchases generally, approximately 21% of Quest’s gross sales for the fifty-two weeks ended August 26, 2023 were through its e-commerce channel and approximately 14% of Atkins’ gross sales for the same period were through its e-commerce channel.
In addition, while shoppers have increased e-commerce purchases generally, approximately 22% of Quest’s gross sales for the fifty-three weeks ended August 31, 2024, were through its e-commerce channel and approximately 17% of Atkins’ gross sales for the same period were through its e-commerce channel.
The regular weekly shipments and consolidation have reduced our costs. For some products, we ship directly to customers from our contract manufacturer through a third-party logistics provider. In some instances, the customer will arrange to pick-up directly finished products from our Distribution Centers. Retailers. We have a wide variety of customers across the mass, food, club, drug, and e-commerce channels.
The regular weekly shipments and consolidation have reduced our costs. For some products, we ship directly to customers from our contract manufacturer through a third-party logistics provider. In some instances, the customer will arrange to pick-up directly finished products from our Distribution Centers. OWYN .
As public opinion on the use of chronic weight management medication is shifting significantly as the popularity of clinical solutions grows and more medications are approved by the FDA, we are looking to communicate to consumers who have elected to use these medications what we believe are the complementary benefits of using our products to support achieving or maintaining their weight management goals.
As public opinion on the use of chronic weight management medication is shifting significantly as the popularity of clinical solutions grows and more medications are approved by the FDA, we are looking to communicate to consumers who have elected to use these medications what we believe are the complementary benefits of using our products to support achieving or maintaining their weight management goals. 7 For all our brands, we have an active and growing digital and social presence, using a comprehensive approach of search, banner, and search engine optimization efforts.
We intend to continue to make focused changes to our approach to consumer outreach to attract consumers beyond our historic core buyers. For our Quest brand, we intend to enhance our marketing efforts to reach more consumers who are seeking products that are aligned with their choice to pursue a healthy and active lifestyle.
For our Quest brand, we intend to enhance our marketing efforts to reach more consumers who are seeking products that are aligned with their choice to pursue a healthy and active lifestyle.
Of that total, approximately 94% of our employees were in the United States, and the rest were in Canada, Europe, Australia, and New Zealand. 116 employees were engaged in marketing and sales, 85 were engaged in R&D, operations and quality, and 70 were engaged in administration. Of our United States employees, 23 employees were hourly and 233 were salaried.
Of that total, approximately 95% of our employees were in the United States, and the rest were in Canada, Europe, Australia, and New Zealand. 133 employees were engaged in marketing and sales, 100 were engaged in R&D, operations and quality, and 83 were engaged in administration. Of our United States employees, 26 employees were hourly and 275 were salaried.
In our normal performance review cycle, which took place in early fiscal year 2023, 99% of our employees held career discussions with their managers to identify opportunities for development and career progression.
To develop effective and empowered leaders, we host regular trainings and informational sessions. In our normal performance review cycle, which took place in early fiscal year 2024, 99% of our employees held career discussions with their managers to identify opportunities for development and career progression.
Because of these career discussions, the accelerated mentorship program and the talent review process conducted by our senior leadership, during fiscal year 2023, we promoted 8% of our workforce and provided associated compensation increases. Our Commitment to Diversity, Equity & Inclusion (“DE&I”) .
Because of career discussions, mentorship opportunities and the talent review process conducted by our senior leadership, during fiscal year 2024, we promoted 9% of our workforce and provided associated compensation increases. Our Commitment to Diversity, Equity, Inclusion & Belonging (“DEI&B”) .
These finished products are then shipped directly to our distribution centers, or shipped directly from the contract manufacturer to the customer. U.S. Storage. We lease two distribution centers, both in Greenfield, Indiana, referred to collectively as the Distribution Centers, where we store finished goods. We utilize over 1.29 million square feet of floor space among our Distribution Centers. Distribution.
These finished products are then shipped directly to our distribution centers, or shipped directly from the contract manufacturer to the customer. U.S. Storage. For the Quest and Atkins brands we lease two distribution centers, both in Greenfield, Indiana, referred to collectively as the Distribution Centers, where we store finished goods.
This transaction is referred to as the “Quest Acquisition.” Our principal executive offices are located at 1225 17 th Street, Suite 1000, Denver, Colorado, 80202. Our telephone number is (303) 633-2840. We maintain a web site at www.thesimplygoodfoodscompany.com .
We refer to the acquisition of Quest Nutrition, LLC as the “Quest Acquisition” and the acquisition of Only What You Need, Inc. as the “OWYN Acquisition”. Our principal executive offices are located at 1225 17 th Street, Suite 1000, Denver, Colorado, 80202. Our telephone number is (303) 633-2840. We maintain a web site at www.thesimplygoodfoodscompany.com .
We believe that the principal competitive factors in the nutritional snacking industry are: • brand awareness and loyalty among consumers; • product ingredients; • macronutrient profile of products; • product claims; • product taste and texture; • convenience of products; • media spending; • product variety, packaging and labeling; and • access to retailer shelf space.
We believe the principal competitive factors in the nutritional snacking industry are: • brand awareness and loyalty among consumers; • product ingredients (including the sourcing and allergen profiles of ingredients); • macronutrient profiles of products; • product claims; • product taste and texture; • product convenience; • advertising campaigns and associated spending; • perceived product value • product variety, packaging and labeling; • access to retailer shelf space; and • product positioning on e-commerce retailer sites.
Under various statutes, these agencies prescribe the requirements and establish the standards for quality and safety and regulate marketing and advertising to consumers. In certain circumstances, these agencies must not only approve products, but also review the manufacturing processes and facilities used to produce these products before they can be marketed in the United States.
In certain circumstances, these agencies must not only approve products, but also review the manufacturing processes and facilities used to produce these products before they can be marketed in the United States.
We believe that we currently compete effectively with respect to each of these factors. However, a number of companies in the nutritional snacking industry have greater financial resources, more comprehensive product lines, broader market presence, longer standing relationships with distributors and suppliers, longer operating histories, greater distribution capabilities, stronger brand recognition, and greater marketing resources than we have.
However, a number of companies in the nutritional snacking industry may compete more effectively for a variety of reasons, including having greater financial resources, more comprehensive product lines, broader market presence, more established relationships with distributors, suppliers and customers, longer operating histories, greater distribution and selling capabilities, stronger brand recognition, or greater innovation and marketing capabilities than we have.
Our brands can appeal to both consumers interested in an active lifestyle who are seeking protein-rich, low-carb snacking options as well as weight management program consumers, which makes our brands highly attractive and strategic for a diverse set of retailers across various distribution channels. Aligned with consumer mega trends.
Our brands can appeal to consumers interested in an active lifestyle who are seeking protein-rich, low-carb snacking options, weight management program consumers, and consumers looking to consume protein through convenient RTD shakes and powders that are plant-based and tested for the top nine allergens, which makes our brands highly attractive and strategic for a diverse set of retailers across various distribution channels.
This information is also reviewed by our Board of Directors about the representation of women and minorities as a percentage of our employees at various levels of management and our Board of Directors, as of August 26, 2023. 13 Female and Minority Representation Female Minority 1 All Employees 56% 35% All People-leaders 48% 26% Director-level 55% 25% VP-level 26% 16% Executive Leadership Team 30% 10% Board of Directors 18% 9% 1 Minority representation includes the percent of United States employees who identify as Black or African American, Asian, Hispanic, Native American, or two or more races.
This information is also reviewed by our Board of Directors. 14 Female and Minority Representation Female Minority 1 All Employees 58% 35% All People-leaders 49% 26% Director-level 50% 26% VP-level 44% 13% Executive Leadership Team 23% 8% Board of Directors 17% 8% 1 Minority representation includes the percent of United States employees who identify as Black or African American, Asian, Hispanic, Native American, or two or more races.
We sell our products on questnutrition.com, Atkins.com , Amazon.com and e-commerce platforms of our brick-and-mortar customers, which all deliver our products directly to the location designated by the consumer. Food Safety and Quality. Food safety and quality is a top priority, and we dedicate substantial resources to ensure that consumers receive safe, high quality food products.
We sell our products on questnutrition.com, Atkins.com, liveowyn.com, Amazon.com and the e-commerce platforms of our brick-and-mortar customers, which all deliver our products directly to the location designated by the consumer.
We retain core in-house capabilities including sales, marketing, brand management, customer relationships, product development, and supply-chain expertise, while collaborating with a diversified pool of contract manufacturers and distributors to execute manufacturing and distribution. Outsourcing these competencies allows us to focus our efforts on innovation, marketing, and sales to meet consumer demands.
We believe our strong balance sheet allows us to participate in attractive acquisition opportunities. Asset-light business with strong cash generation . We retain core in-house capabilities including sales, marketing, brand management, customer relationships, product development, and supply-chain expertise, while collaborating with a diversified pool of contract manufacturers and distributors to execute manufacturing and distribution.
We increasingly rely on cloud computing and other technologies that result in third parties holding significant amounts of customer, consumer or employee information on our behalf.
However, we cannot control or prevent every potential technology failure, adverse environmental event, third-party service interruption or cybersecurity risk. We increasingly rely on cloud computing and other technologies that result in third parties holding significant amounts of customer, consumer or employee information on our behalf.
We believe that our ongoing efforts to educate consumers about the benefits of our nutrition philosophy and lifestyle will further reinforce our brands.
We believe social media is a cost-effective way of continuing to attract and retain our consumers. We believe our ongoing efforts to educate consumers about the benefits of our nutritional philosophy and lifestyle will further reinforce our brands.
While provided free of charge, we also offer over 1,600 protein-rich, low-carbohydrate and low-sugar recipes designed to help consumers achieve and maintain a healthy lifestyle, while still enjoying delicious food. Marketing, Advertising and Consumer Outreach Our marketing efforts are designed to increase consumer awareness of and demand for our products.
Atkins’ cookie products are a convenient source of high-protein combined with low net carbs and low-sugar. Recipes. While provided free of charge, we also offer over 1,600 protein-rich, low-carbohydrate and low-sugar recipes designed to help consumers achieve and maintain a healthy lifestyle, while still enjoying delicious food. Core OWYN Products RTD Shakes and Powders .
All of our core ingredients are purchased according to rigorous standards to assure food quality and safety. These core ingredients are generally available in adequate quantities from several suppliers. We competitively bid with major suppliers to source competitively priced, quality ingredients and packaging that meet our standards.
These core ingredients are generally available in adequate quantities from several suppliers. We competitively bid with major suppliers to source competitively priced, quality ingredients and packaging that meet our standards. For certain ingredients we establish direct purchasing agreements with suppliers, under which our contract manufacturers source ingredients to produce finished products.
We take a deliberate approach to new product development, focusing on enhancing existing products, innovating flavor and form varieties, and expanding into adjacent snacking products.
Product Innovation A portion of our sales is driven by new products, and as a result, we believe innovation is, and will continue to be, an important component of our business. We take a deliberate approach to new product development, focusing on enhancing existing products, innovating flavor and form varieties, and expanding into adjacent snacking products.
A substantial majority of our sales are generated from a limited number of retailers. Sales to our largest retailer, Walmart, represented approximately 31% of consolidated sales in fiscal year 2023, of which approximately 24% is through their mass retail channel and approximately 7% is through their Sam’s club and e-commerce channels.
Sales to our largest retailer, Walmart Inc., represented approximately 31% of consolidated sales in fiscal year 2024, of which approximately 23% was through their mass retail channel and approximately 8% was through their Sam’s club and e-commerce channels. Sales to our next largest retailer, Amazon, represented approximately 18% of consolidated sales in fiscal year 2024.
Our lean infrastructure allows for significant flexibility, speed-to-market, and minimal capital investment, which translates into relatively consistent and robust free cash flow generation over time, driven by strong gross margins. Experienced leadership team . Simply Good Foods has an experienced team of industry veterans with extensive experience across multiple branded consumer products, food and nutrition categories.
Outsourcing these competencies allows us to focus our efforts on innovation, marketing, and sales to meet consumer demands. Our lean infrastructure allows for significant flexibility, speed-to-market, and minimal capital investment, which translates into relatively consistent and robust free cash flow generation over time, driven by strong gross margins. Experienced leadership team .
We regularly host “Be Empowered” sessions for employees, which are educational classes and networking opportunities that teach our nutrition philosophy and our different business functions. To develop effective and empowered leaders, we host regular trainings and informational sessions.
Training and development is critical to our success, helps our employees grow their career, and is one way we attract, motivate and retain our employees. We regularly host “Be Empowered” sessions for employees, which are educational classes and networking opportunities that teach our nutrition philosophy and our different business functions.
In the United States, the federal agencies governing the manufacture, distribution and advertising of products include, among others, the U.S. Federal Trade Commission (“FTC”), the U.S. Food and Drug Administration (“FDA”), the U.S. Environmental Protection Agency, and the Occupational Safety and Health Administration, in addition to similar state and local agencies.
Federal Trade Commission (“FTC”), the U.S. Food and Drug Administration (“FDA”), the U.S. Environmental Protection Agency, and the Occupational Safety and Health Administration, in addition to similar state and local agencies. Under various statutes, these agencies prescribe the requirements and establish the standards for quality and safety and regulate marketing and advertising to consumers.
We are a leader in the fast growing nutritional snacking category, and both the Quest and Atkins brands are leading brands with combined scale in protein bars, protein chips, confections, cookies, and RTD shakes. Our highly focused snacking portfolio provides us with a leading position within retailers’ nutrition and wellness aisles, resulting in meaningful shelf space.
Our Strengths Powerful brands with strong consumer awareness and loyalty . We are a leader in the fast-growing nutritional snacking category, and our Quest, Atkins and OWYN brands are leading brands with combined scale in protein bars, protein chips, confections, cookies, RTD shakes, and protein powders.
As a result, we determined our operations are appropriately still organized into one, consolidated operating segment and reportable segment. Regulation and Compliance Along with contract manufacturers, brokers, distributors, ingredients and packaging suppliers, Simply Good Foods is primarily subject to laws and regulations in the United States promulgated by federal, state and local government authorities.
Regulation and Compliance Along with contract manufacturers, brokers, distributors, ingredients and packaging suppliers, Simply Good Foods is primarily subject to laws and regulations in the United States promulgated by federal, state and local government authorities. In the United States, the federal agencies governing the manufacture, distribution and advertising of products include, among others, the U.S.
Our Atkins Endulge® line, which is designed to satisfy consumers’ sweet cravings, and which we call Treats, consists of delicious desserts without all of the added sugar.
Our rich and creamy Atkins RTD shakes contain 10 to 30 grams of protein, as well as other important vitamins and minerals. 8 Confections. Our Atkins Endulge line, which is designed to satisfy consumers’ sweet cravings, and which we call Treats, consists of delicious desserts without all the added sugar providing consumers with the option to indulge. Cookies.
For certain ingredients we establish direct purchasing agreements with suppliers, under which our contract manufacturers source ingredients to produce finished products. We also actively manage the cost of most of our packaging supplies, such as corrugate, film, and cartons.
We also procure certain ingredients directly that our contract manufacturers then use to produce our products. We actively manage the cost of most of our packaging supplies, such as corrugate, film, and cartons. Historically, OWYN has directly purchased and therefore owns the ingredients and packaging the contract manufacturers use for the production of OWYN products. Manufacturing.
We also own virtually all of the recipes and specifications for our products. 9 Competition We compete primarily with nutritional snacking brands in large retail and e-commerce environments. The nutritional snacking industry is fragmented and highly competitive and includes a number of diverse competitors.
We also own virtually all of the recipes and specifications for our products. 10 Competition The nutritional snacking industry is fragmented and highly competitive and includes a number of diverse competitors. We have a number of diverse competitors of varying sizes and capabilities, including developers, marketers and sellers of other branded and private label nutritional snacking food products.
The majority of our products are shipped directly to one central warehouse, which is a leased warehouse managed by a third-party logistics provider. We also have a separate warehouse for a portion of our distribution needs. A substantial portion of our inventory is shipped directly to our retailers from the warehouse by the same third-party logistics provider.
We also have separate warehouses for a portion of our distribution needs. A substantial portion of our inventory is shipped directly to our retailers from the warehouse by the same third-party logistics provider. Most of our 11 remaining customers pick up their orders at our distribution centers and make their own arrangements for delivery to their fulfillment network.
For both the Quest and Atkins brands, we have an active and growing digital and social presence, using a comprehensive approach of search, banner, and search engine optimization efforts. We are a leader in social media, with an evolving social media presence on major channels such as Facebook, Instagram, Pinterest, X (formerly known as Twitter) and YouTube.
We are a leader in social media, with an evolving social media presence on major channels such as Facebook, Instagram, Pinterest, X (formerly known as Twitter) and YouTube. We also have a growing network of social influencers and content creators, who promote our products in their targeted social media posts.
Information Technology We rely heavily on information systems for management of our supply chain, inventory, payment of obligations, collection of cash, human capital management, financial tools and other business processes and procedures. Our ability to manage our business functions efficiently and effectively depends significantly on the reliability and capacity of these systems.
We hold an ISO 22000 certification for our U.S. operations, excluding OWYN, which we first obtained during fiscal year 2022. Information Technology We rely heavily on information systems for management of our supply chain, inventory, payment of obligations, collection of cash, human capital management, financial tools and other business processes and procedures.
We have instituted controls, including information technology governance controls that are intended to protect our computer systems and our information technology systems and networks. We also have business continuity plans that attempt to anticipate and mitigate failures. However, we cannot control or prevent every potential technology failure, adverse environmental event, third-party service interruption or cybersecurity risk.
Our ability to manage our business functions efficiently and effectively depends significantly on the reliability and capacity of these systems. We have instituted controls, including information technology governance controls that are intended to protect our computer systems and our information technology systems and networks. We also have business continuity plans that attempt to anticipate and mitigate failures.
Our management team’s extensive experience is complemented by the significant industry expertise of our Board of Directors.
Simply Good Foods has an experienced team of industry veterans with extensive experience across multiple branded consumer products, food and nutrition categories. Our management team’s extensive experience is complemented by the significant industry expertise of our Board of Directors.
We believe our use of demand forecasting and vendor-managed inventory systems enables us to meet shipping demands, ensure timely delivery of orders and offer service levels to our customers. Sourcing. The principal ingredients to manufacture our products include chocolate and other coatings, dairy, proteins, soy, and nuts. Our packaging consists of flexible film, cartons, tetra paper, and corrugate.
For certain customers, RTD shakes are shipped directly from the contract manufacturer to the customers’ locations. We believe our use of demand forecasting and vendor-managed inventory systems enables us to meet shipping demands, ensure timely delivery of orders and offer service levels to our customers.
Quest’s cheddar cheese crackers launched during fiscal year 2023, contain 10 grams of protein, 5 grams of net carbs and 7 grams of fat. Confections. Quest’s confections include full-size and mini peanut butter cups, “fudgey” brownie, “gooey” caramel candy bites, chocolatey coated peanut candies and “coconutty” caramel candy bars sold in a variety of packaging.
Quest’s protein chips and crackers line quickly became a high-selling product offering an attractive nutrition profile when compared to conventional chip and cracker products. Confections. Quest’s confections include peanut butter cups, “fudgey” brownie, “gooey” caramel candy bites, chocolatey coated peanut candies and “coconutty” caramel candy bars sold in a variety of packaging.
Our international supply chain is run by a lean team solely focused on international operations. Similar to U.S. operations, international operations utilize contract manufacturers for products, and distributors for distribution and sales.
Similar to U.S. operations, international operations utilize contract manufacturers for products, and distributors for distribution and sales. Food Safety and Quality . Food safety and quality is a top priority, and we dedicate substantial resources to ensure that consumers receive safe, high quality food products.
To keep on-the-go consumers energized and fueled, our Atkins bars offer a convenient and effective solution, providing consumers with protein, fiber and a delicious taste. Atkins offers two main types of bars: Atkins Meal Bars and Atkins Snack Bars. Atkins Meal Bars contain 13 to 17 grams of protein and are available in more than 10 different flavors.
To keep on-the-go consumers energized and fueled, our Quest bars offer a convenient and effective solution, providing consumers with protein, fiber and a delicious taste. Bake Shop. Quest’s cookies, muffins, and brownies sold under the Quest Bake Shop banner are convenient sources of high-protein combined with low net carbs and low-sugar. Salty Snacks .
Removed
Business Trends in Fiscal Year 2023 Throughout fiscal year 2023, we continued to actively monitor the effects of the dynamic macroeconomic inflationary environment in the United States and elsewhere, elevated levels of supply chain costs, the level of consumer mobility, including the rate at which consumers return to working outside the home, and consumer behavior.
Added
With our OWYN brand, we strive to offer RTD shakes and protein powders that are plant-based and tested for the top nine allergens in a variety of protein levels.
Removed
Current or future governmental policies may increase the risk of inflation and possible economic recession, which could further increase the costs of ingredients, packaging and finished goods for our business as well as negatively affect consumer behavior and demand for our products.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe loss of, a disruption in or an inability to efficiently operate our fulfillment network could materially and adversely affect our business, financial condition, and results of operations. For our U.S. operations, we utilize distribution centers in Greenfield, Indiana. A substantial portion of our inventory is shipped directly to our retailers from these centers by a third-party logistics provider.
Biggest changeFor our U.S. operations, we utilize distribution centers in Greenfield, Indiana, Greenwood, Indiana, Romeoville, Illinois and Hackettstown, New Jersey. A substantial portion of our inventory is shipped directly to our retailers from these centers by a third-party logistics provider. Most of our other customers pick-up their orders at our distribution centers and arrange for delivery to their fulfillment network.
Adverse messaging in the media, including social media, or within certain influencer communities, relating to the marketing of nutritional snacking products or weight-related dietary programs may adversely affect the overall consumer impression of certain of our products, programs or brands, which may materially and adversely affect our business.
Adverse messaging in the media, including social media, or within certain influencer communities, relating to the marketing of nutritional snacking products or weight-related dietary programs may adversely affect the overall consumer impression of certain products, programs or brands, which may materially and adversely affect our business.
If the use of weight management medication becomes more popular and more widely used and we are unable to communicate effectively to consumers how our products can support achieving or maintaining their weight management goals, of our business could be materially and adversely affected.
If the use of weight management medication becomes more popular and more widely used and we are unable to communicate effectively to consumers how our products can support achieving or maintaining their weight management goals, our business could be materially and adversely affected.
We may be adversely affected by increased demand for our specific core ingredients, a reduction in overall supply of required core ingredients, suppliers raising their prices, and increases in the cost of packaging and distributing core ingredients.
We may be adversely affected by increased demand for our specific core ingredients, a reduction in the overall supply of required core ingredients, suppliers raising their prices, and increases in the cost of packaging and distributing core ingredients.
Acquisitions involve numerous risks and uncertainties, including intense competition for suitable acquisition targets, which could increase target prices and/or materially and adversely affect our ability to consummate deals on favorable terms, the potential unavailability of financial resources necessary to consummate acquisitions, the risk we improperly value and price a target, the potential inability to identify all of the risks and liabilities inherent in a target company or assets notwithstanding our diligence efforts, the diversion of management’s attention from the day-to-day operations of our business and additional strain on our existing personnel, increased leverage resulting from the additional debt financing that may be required to complete an acquisition, dilution of our net current book value per share if we issue additional equity securities to finance an acquisition, difficulties in identifying suitable acquisition targets or in 23 completing any transactions identified on sufficiently favorable terms and the need to obtain regulatory or other governmental approvals that may be necessary to complete acquisitions.
Acquisitions involve numerous risks and uncertainties, including intense competition for suitable acquisition targets, which could increase target prices and/or materially and adversely affect our ability to consummate deals on favorable terms, the potential unavailability of financial resources necessary to consummate acquisitions, the risk we improperly value and price a target, the potential inability to identify all of the risks and liabilities inherent in a target company or assets notwithstanding our diligence efforts, the diversion of management’s attention from the day-to-day operations of our business and additional strain on our existing personnel, increased leverage resulting from the additional debt financing that may be required to complete an acquisition, dilution of our net current book value per share if we issue additional equity securities to finance an acquisition, difficulties in identifying suitable acquisition targets or in completing any transactions identified on sufficiently favorable terms and the need to obtain regulatory or other governmental approvals that may be necessary to complete acquisitions.
If we or our third-party providers fail to maintain or protect our respective information technology systems and data integrity effectively, fail to implement new systems, update or expand existing systems, fail to provide necessary privacy law disclosures or fail to anticipate, plan for or manage significant disruptions to or compromises of systems involved in our operations, we could: • lose existing customers; • have difficulty preventing, detecting, and controlling fraud; • have disputes with customers, suppliers, distributors or others; • be subject to regulatory sanctions, including sanctions stemming from violations of the Health Insurance Portability and Accountability Act of 1996 or other federal or state privacy laws; • suffer reputational harm, and • incur unexpected costs to remediate any unauthorized access of our systems and implement protective measures against future attacks.
If we or our third-party providers fail to maintain or protect our respective information technology systems and data integrity effectively, fail to implement new systems, update or expand existing systems, fail to provide necessary privacy law disclosures or fail to anticipate, plan for or manage significant disruptions to or compromises of systems involved in our operations, we could: • lose existing customers; • have difficulty preventing, detecting, and controlling fraud; 26 • have disputes with customers, suppliers, distributors or others; • be subject to regulatory sanctions, including sanctions stemming from violations of the Health Insurance Portability and Accountability Act of 1996 or other federal or state privacy laws; • suffer reputational harm, and • incur unexpected costs to remediate any unauthorized access of our systems and implement protective measures against future attacks.
Such factors may include changes in: • food and drug laws (including FDA regulations); • laws related to product labeling, advertising and marketing practices; • laws and programs restricting the sale and advertising of certain of our products; • laws and programs aimed at reducing, restricting or eliminating ingredients present in certain of our products; • laws and programs aimed at reducing, restricting or eliminating ingredients or packaging present in certain of our products to meet government objectives to combat climate change or certain labor practices; • laws and programs aimed at discouraging the consumption of products or ingredients or altering the package or portion size of certain of our products; • state consumer protection and disclosure laws; • taxation requirements, including the imposition or proposed imposition of new or increased taxes or other limitations on the sale of our products; competition laws; • anti-corruption laws, including the U.S.
Such factors may include changes in: • food and drug laws (including FDA regulations); 27 • laws related to product labeling, advertising and marketing practices; • laws and programs restricting the sale and advertising of certain of our products; • laws and programs aimed at reducing, restricting or eliminating ingredients present in certain of our products; • laws and programs aimed at reducing, restricting or eliminating ingredients or packaging present in certain of our products to meet government objectives to combat climate change or certain labor practices; • laws and programs aimed at discouraging the consumption of products or ingredients or altering the package or portion size of certain of our products; • state consumer protection and disclosure laws; • taxation requirements, including the imposition or proposed imposition of new or increased taxes or other limitations on the sale of our products; competition laws; • anti-corruption laws, including the U.S.
Any future acquisitions may pose risks associated with entry into new geographic markets, including outside the United States and our current international markets, distribution channels, lines of business or product categories, where we may not have significant prior experience and where we may not be as successful or profitable as we are in businesses and geographic regions where we have greater familiarity and brand recognition.
Any future acquisitions may pose risks associated with entry into new geographic markets, including outside the United States and our current international markets, distribution channels, lines of business or product categories, where we may not have significant prior experience and where we may not be as successful or profitable as we are in businesses and geographic regions where we have greater familiarity and brand 24 recognition.
We rely on a single-sourced logistics provider for distribution and product shipments in the United States from our distribution centers. Our utilization of delivery services for shipments is subject to risks that may affect the ability to provide delivery services that adequately meet our shipping needs including increases in fuel prices, labor shortages, employee strikes and inclement weather.
We rely primarily on a single-sourced logistics provider for distribution and product shipments in the United States from our distribution centers. Our utilization of delivery services for shipments is subject to risks that may affect the ability to provide delivery services that adequately meet our shipping needs including increases in fuel prices, labor shortages, employee strikes and inclement weather.
Consumer perceptions of the nutritional profile of our products and related eating practices may shift. Consumers may also no longer perceive products with fewer carbohydrates, higher levels of protein, higher levels of fat, or additional fiber or which contain alternative sweeteners as healthy or needed to achieve personal weight management, wellness, or fitness goals.
Consumer perceptions of the nutritional profile of our products and related eating practices may shift. Consumers may also no longer perceive products with fewer carbohydrates, higher levels of protein, higher levels of fat, or additional fiber or which contain alternative sweeteners as healthy or needed to achieve personal weight management, wellness, lifestyle, or fitness goals.
Regulatory Risks and Litigation Risks All of our products must comply with federal, state and local regulations. Any non-compliance with the FDA or other applicable regulations could harm our business. 25 Our products must comply with various rules and regulations, including those regarding product manufacturing, food safety, required testing and appropriate labeling of our products.
Regulatory Risks and Litigation Risks All of our products must comply with federal, state and local regulations. Any non-compliance with the FDA or other applicable regulations could harm our business. Our products must comply with various rules and regulations, including those regarding product manufacturing, food safety, required testing, and appropriate labeling of our products.
A successful claim of trademark, copyright or other intellectual property infringement, misappropriation, or other violation against us could prevent us from providing our products or services or could require us to redesign or rebrand our products or packaging if we cannot license such third-party intellectual property on reasonable terms.
A 25 successful claim of trademark, copyright or other intellectual property infringement, misappropriation, or other violation against us could prevent us from providing our products or services or could require us to redesign or rebrand our products or packaging if we cannot license such third-party intellectual property on reasonable terms.
We periodically update our operations and financial systems, procedures and controls; however; we still rely on certain manual processes and procedures that may not scale proportionately with our business growth. Our systems will continue to require automation, modifications and improvements to 28 respond to current and future changes in our business.
We periodically update our operations and financial systems, procedures and controls; however, we still rely on certain manual processes and procedures that may not scale proportionately with our business growth. Our systems will continue to require automation, modifications and improvements to respond to current and future changes in our business.
As a result, our interest expense may increase, our ability to refinance some or all of our existing indebtedness may be affected, and our available cash flow may be adversely affected. We may need additional capital in the future, and it may not be available on acceptable terms or at all.
As a result, our interest expense may increase, our ability to refinance some or all our existing indebtedness may be affected, and our available cash flow may be adversely affected. We may need additional capital in the future, and it may not be available on acceptable terms or at all.
Our growth may be limited if we cannot maintain or secure additional shelf or retail space for our products in brick-and-mortar retailers. Our results depend on our ability to drive revenue growth, in part, by expanding the distribution channels for our products.
Our growth may be limited if we cannot maintain or secure additional shelf or retail space for our products in brick-and-mortar retailers. Our results depend on our ability to drive revenue growth, in part, by maintaining and expanding the distribution channels for our products.
Department of Treasury, Office of Foreign Assets Control (“OFAC”) and the European Union (“EU”); 26 • laws relating to export, re-export, transfer, tariffs and import controls, including the Export Administration Regulations, the EU Dual Use Regulation and the customs and import laws administered by the U.S.
Department of Treasury, Office of Foreign Assets Control (“OFAC”) and the European Union (“EU”); • laws relating to export, re-export, transfer, tariffs and import controls, including the Export Administration Regulations, the EU Dual Use Regulation and the customs and import laws administered by the U.S.
Some of our competitors have resources substantially greater than we have and sell brands that may be more widely recognized than our brands. Our current and potential competitors may offer products similar to our products, a wider range of products than we offer, and may offer such products at more competitive prices than we do.
Some of our competitors have resources substantially greater than we have and market and sell brands that may be more widely recognized than our brands. Our current and potential competitors may offer products similar to our products, a wider range of products than we offer, and may offer such products at more competitive prices than we do.
We may also not succeed in evolving our advertising and other efforts to appeal to our target consumers. If we cannot identify and capture new audiences and demographics for all our brands, our ability to integrate additional brands successfully will be adversely affected.
We may also not succeed in evolving our advertising and other efforts to appeal to our target consumers. If we cannot identify and capture new audiences and demographics for our brands, our ability to integrate additional brands successfully will be adversely affected. We may also not succeed in evolving our advertising and other efforts to appeal to our target consumers.
The FDA requires all carbohydrates per serving to be listed on the Nutrition Facts Panel (“NFP”) of a package. Besides the information on the NFP, we use the term “net carbohydrate” (or “net carbs”) on our existing product packaging.
The FDA requires all carbohydrates per serving to be listed on the Nutrition Facts Panel (“NFP”) of a package. Besides the information on the NFP, we often use the term “net carbohydrate” (or “net carbs”) on our existing product packaging.
The failure of these systems to operate effectively, whether from maintenance problems, upgrading or transitioning to new 24 platforms, or a breach in security of these systems, could result in interruptions or delays in our operations, reduce efficiency or negatively affect our operations.
The failure of these systems to operate effectively, whether from maintenance problems, upgrading or transitioning to new platforms, or a breach in security of these systems, could result in interruptions or delays in our operations, reduce efficiency or negatively affect our operations.
Moreover, the growing acceptance and use of medication to manage weight could negatively affect the demand for many types of food in general and our products.
Moreover, the growing acceptance and use of medication to manage weight could negatively affect the demand for many types of food in general and our 17 products.
Our results of operations depend on, among other things, our ability to maintain and increase sales volume with our existing distributors and retailers, to attract new consumers and to provide products that appeal to 30 consumers at prices they are willing and able to pay. Prolonged unfavorable economic conditions may have an adverse effect on our sales and profitability.
Our results of operations depend on, among other things, our ability to maintain and increase sales volume with our existing distributors and retailers, to attract new consumers and to 31 provide products that appeal to consumers at prices they are willing and able to pay. Prolonged unfavorable economic conditions may have an adverse effect on our sales and profitability.
These include failure to achieve financial or operating objectives regarding an acquisition, systems, operational and managerial controls and procedures, the need to modify systems or to add management resources, difficulties in the integration and retention of consumers or personnel and the integration and effective deployment of operations or technologies, amortization of acquired assets (which would reduce future reported earnings), possible adverse short-term effects on cash flows or operating results, integrating personnel with diverse backgrounds and organizational cultures, coordinating sales and marketing functions and failure to obtain and retain key personnel of an acquired business.
These include failure to achieve financial or operating objectives regarding an acquisition, systems, operational and managerial controls and procedures, the need to modify systems or to add management resources, difficulties in the integration and retention of consumers or personnel and the integration and effective deployment of operations or technologies, amortization of acquired assets (which would reduce future reported earnings), possible adverse short-term effects on cash flows or operating results, the integration of personnel with diverse backgrounds and organizational cultures, the coordination of sales and marketing functions and failure to obtain and retain key personnel of an acquired business.
Changes in interest rates may adversely affect our earnings and cash flows. Our indebtedness under our revolving credit facility bears interest at variable interest rates that use the Secured Overnight Financing Rate (“SOFR”) as a benchmark rate. SOFR is calculated based on short-term repurchase agreements, backed by Treasury securities.
Changes in interest rates may adversely affect our earnings and cash flows. Our indebtedness under our revolving credit facility bears interest at variable interest rates that use the Secured Overnight Financing Rate (“SOFR”) as a benchmark rate. SOFR is calculated based on short-term repurchase agreements, backed by Treasury securities. SOFR is observed and backward looking.
In addition, p rolonged unfavorable economic conditions, including because of recession or slowed economic growth, or public health outbreaks, endemics or pandemics, may have an adverse effect on our sales and profitability. If we cannot maintain or increase prices of our products to cover elevated input costs, our margins may decrease.
In addition, p rolonged unfavorable economic conditions, including because of recession or slowed economic growth, labor strikes, or public health outbreaks, endemics or pandemics, may have an adverse effect on our sales and profitability. If we cannot maintain or increase the prices of our products to cover elevated input costs, our margins may decrease.
Factors that may affect consumer perception of healthy products include dietary trends and attention to different nutritional aspects of foods, concerns regarding the health effects of specific ingredients and nutrients, trends away from specific ingredients and processing in products and increasing awareness of the environmental and social effects of product production.
Factors that may affect consumer perception of healthy products include dietary trends and attention to different nutritional aspects of foods, concerns regarding the health effects of specific ingredients and nutrients, regulations on certain ingredients, trends away from specific ingredients and processing in products and increasing awareness of the environmental and social effects of product production.
Pandemics, epidemics or disease outbreaks, such as COVID, have in the past and may in the future disrupt our business, including, among other things, consumption and trade patterns, our supply chain and production processes, each of which could materially affect our operations, liquidity, financial condition and results of operations.
Pandemics, epidemics or disease outbreaks have in the past and may in the future disrupt our business, including, among other things, consumption and trade patterns, our supply chain and production processes, each of which could materially affect our operations, liquidity, financial condition and results of operations.
The core ingredients used in manufacturing our products include nuts, protein and fiber. We rely on a limited number of third-party suppliers to provide these core ingredients, a portion of which are international companies. There may be a limited market supply of any of these core ingredients.
The core ingredients used in manufacturing our products include nuts, protein and fiber. We rely on a limited number and in certain cases single third-party suppliers to provide these core ingredients, a portion of which are international companies. There may be a limited market supply of any of these core ingredients.
Our success depends, in part, on our ability to advance sound nutrition research and to anticipate the tastes and dietary habits of consumers and other consumer trends and to offer products with marketing messaging that appeal to their needs and preferences on a timely and affordable basis.
Our success depends, in part, on our ability to advance sound nutrition research and to anticipate the tastes and dietary habits of consumers and other consumer trends and to offer products with marketing that appeals to their needs and preferences on a timely and affordable basis.
If other nutritional approaches become more popular, or are generally perceived to be more effective, we may not be able to compete effectively. In addition, public opinion on the use of chronic weight management medication is shifting significantly as the popularity of clinical solutions grows and more medications are approved by the FDA.
If other nutritional approaches become more popular, or are generally perceived to be more effective, we may not be able to compete effectively. In addition, public opinion on the use of chronic weight management medication continues to shift significantly as the popularity of clinical solutions grows and more weight management medications are approved by the FDA.
Products, ingredients, or methods of eating once considered healthy may become disfavored by consumers, scientifically disproven or no longer be perceived as healthy.
Products, ingredients, or methods of eating once considered healthy may become disfavored by consumers, scientifically questioned or no longer be perceived as healthy.
We also consistently evaluate our product lines to determine whether to discontinue certain products. Discontinuing products may increase our profitability but could reduce our sales and cause consumers to shop other brands. The discontinuation of product lines may have an adverse effect on our business, financial condition and results of operations.
We also consistently evaluate our product lines to determine whether to redesign or discontinue certain products. Redesigning or discontinuing products may increase our profitability but could reduce our sales and cause consumers to shop other brands. The reformulation or discontinuation of product lines may have an adverse effect on our business, financial condition and results of operations.
We focus on products we believe have positive effects on health and compete in a market that relies on innovation and evolving consumer preferences. The packaged food industry in general, and the nutritional snacking industry in particular, is subject to changing consumer trends, demands and preferences and emerging nutrition science is constantly evolving.
We develop, market and sell products we believe have positive effects on health and compete in a market that relies on innovation and evolving consumer preferences. The packaged food industry in general, and the nutritional snacking industry in particular, is subject to changing consumer trends, demands and preferences and nutrition science is constantly evolving.
We do not use hedges for availability of any core ingredients. Any material upward movement in core ingredient or packaging pricing could negatively affect our margins if we cannot find efficiencies or pass these costs on to our consumers, or our sales if we are forced to increase our prices.
We do not use hedges for availability of any core ingredients or packaging. Any material upward movement in core ingredient or packaging pricing could negatively affect our margins if we cannot find efficiencies or pass these costs on to our consumers.
We may also be adversely affected by news or other negative publicity, regardless of accuracy, regarding other aspects of our business, such as: • public health concerns, illness or safety; • the perception of our environmental stewardship and the effects our business has on the environment; 18 • security breaches of confidential consumer or employee information; • employee related claims relating to alleged employment discrimination, health care and benefit issues; or • government or industry findings about or the financial stability of our retailers, distributors, manufacturers or others across our supply chain.
We may also be adversely affected by news or other negative publicity, regardless of accuracy, regarding other aspects of our business, such as: • public health concerns, illness or safety; • the perception of our environmental stewardship and the effects our business has on the environment; • security breaches of confidential consumer or employee information; • employee related claims relating to alleged employment discrimination, health care and benefit issues; or • government or industry findings about or the financial stability of our retailers, distributors, manufacturers or others across our supply chain. 19 As part of our marketing initiatives, we have contracted with certain public figures to market and endorse our products.
Unanticipated fluctuations in product requirements could cause fluctuations in our results from quarter-to-quarter. Consolidation among retailers may also materially and adversely affect our results. An increase in the concentration of our sales to large customers may negatively affect our profitability due to the effect of higher shelving fees and reduced volumes of product sold.
Consolidation among retailers may also materially and adversely affect our results. An increase in the concentration of our sales to large customers may negatively affect our profitability due to the effect of higher shelving fees and reduced volumes of product sold.
As of August 26, 2023, we had approximately $285 million in outstanding term loan indebtedness and a revolving credit facility with availability of up to $75 million with no amounts drawn on that revolving credit facility.
As of August 31, 2024, we had approximately $400 million in outstanding term loan indebtedness and a revolving credit facility with availability of up to $75 million with no amounts drawn on that revolving credit facility.
Conversely, occasionally, we may experience unanticipated increases in orders for our products from these retailers that can create supply chain problems and may cause unfilled orders. If we cannot meet increased demand for our products, our reputation with 22 these retailers, and ultimately our consumers, may be harmed.
Conversely, occasionally, we may experience unanticipated increases in orders for our products from these retailers that can create supply chain problems and may cause unfilled orders. If we cannot meet increased demand for our products, our reputation with these retailers, and ultimately our consumers, may be harmed. Unanticipated fluctuations in product requirements could cause fluctuations in our results from quarter-to-quarter.
Competitive factors in the nutritional snacking industry include product quality, taste, brand awareness among consumers, nutritional content, simpler and less processed ingredients, innovation of “on-trend” snacks, variety of snacks offered, grocery aisle placement, access to retailer shelf space, price, advertising and promotion, product packaging and package design.
Competitive factors in the nutritional snacking industry include product quality, taste, texture, brand awareness among consumers, nutritional content, the sourcing and degree of processing of ingredients, innovation of “on-trend” snacks, variety of snacks offered, allergen profile, grocery aisle placement, access to retailer shelf space, price, advertising and promotion, product packaging and package design.
We intend to grow through mergers and acquisitions or joint ventures, and we may not successfully integrate, operate or realize the anticipated benefits of such business combinations. As part of our strategic initiatives, we intend to pursue mergers and acquisitions or joint ventures.
We intend to grow through mergers and acquisitions or joint ventures, and we may not successfully integrate, operate or realize the anticipated benefits of such business combinations. As part of our strategic initiatives, we intend to pursue acquisitions or joint ventures, such as the OWYN Acquisition we completed during fiscal year 2024.
If having our products available for consumer purchase through our retail customers is disrupted because of an inability to obtain ingredients or packaging, labor challenges at our logistics providers or our contract manufacturers, or if our customers experience delays in stocking our products in their locations, we will experience a reduction in sales at retail and our results of operations could be material and adversely affected. 21 We are subject to risks associated with protection of our trade secrets by our third-party contract manufacturers.
If having our products available for consumer purchase through our retail customers is disrupted because of an inability to obtain ingredients or packaging, labor challenges at our logistics providers or our contract manufacturers, or if our customers experience delays in stocking our products in their locations, we will experience a reduction in sales at retail and our results of operations could be material and adversely affected.
Given that SOFR is a secured rate backed by government securities, it is a rate that does not take into account bank credit risk, as was the case with LIBOR. SOFR is therefore likely to be lower than LIBOR and is less likely to correlate with the funding costs of financial institutions.
Given SOFR is a secured rate backed by government securities, it is a rate that does not take into account bank credit risk. SOFR is therefore less likely to correlate with the funding costs of financial institutions.
Whether or not a claim or lawsuit is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential consumers and our corporate and brand image.
Any of these events could materially and adversely affect our business, financial condition and results of operations. Whether or not a claim or lawsuit is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential consumers and our corporate and brand image.
Furthermore, the SEC has proposed rule changes that would require registrants to include certain climate-related disclosures, including greenhouse gas emission data with third-party attestation and climate-related financial statement metrics in a note to their audited financial statements.
Furthermore, the SEC has adopted rule changes, and the State of California has enacted legislation that would require us to include certain climate-related disclosures, including greenhouse gas emission data with third-party attestation and climate-related financial statement metrics in a note to their audited financial statements.
Supply chain challenges and supply chain constraints relating to ingredients, freight and packaging, including cost 16 inflation, have negatively affected our gross margins and profitability during fiscal year 2023 and may continue to have a negative effect on our future operating results and profitability.
Supply chain challenges and supply chain constraints relating to ingredients, freight and packaging, including cost inflation, have negatively affected our gross margins and profitability in the past and may continue to have a negative effect on our future operating results and profitability.
These SEC proposals related to the enhancement and standardization of climate-related disclosures may require us to change our accounting policies, to alter our operational policies and to implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or to restate our published financial statements.
These rules and legislation may require us to change our accounting policies, to alter our operational policies and to implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or to restate our published financial statements.
Consequently, investors may need to rely on sales of their shares of common stock after the price has appreciated, which may never occur, as the only way to realize any future gains on their investment.
We do not anticipate declaring any cash dividends to holders of our common stock in the foreseeable future. Consequently, investors may need to rely on sales of their shares of common stock after the price has appreciated, which may never occur, as the only way to realize any future gains on their investment.
We may also not succeed in evolving our advertising and other efforts to appeal to our target consumers. Accordingly, we may not be able to successfully implement our growth strategies, expand the number of our brands, or continue to maintain growth in our sales at our current rate, or at all.
Accordingly, we may not be able to successfully implement our growth strategies, expand the number of our brands, or continue to maintain growth in our sales at our current rate, or at all.
Even if we can raise the prices of our products, consumers might react negatively to these price increases, which could have a material adverse effect on, among other things, our brands, reputation, and sales. During fiscal year 2023, our price increases may have caused some consumers to purchase fewer of our products than they have in the past.
Even if we can raise the prices of our products, consumers might react negatively to these price increases, which could have a material adverse effect on, among other things, our brands, reputation, and sales.
If we do not generate enough cash flow to pay our debt service obligations, we may have to refinance all or part of our existing debt, sell our assets, borrow more money or raise equity. We may not be able to take any of these actions timely, on terms satisfactory to us, or at all.
If we do not generate enough cash flow to pay our debt service obligations, we may have to refinance all or part of our existing debt, sell our assets, borrow more money or raise equity.
There can be no assurance that retailers will provide sufficient, or any, shelf space, nor that online retailers will provide online access to, or adequate product visibility on, their platform to enable us to meet our growth objectives.
There can be no assurance that retailers will provide sufficient, or any, shelf space, nor that online retailers will provide online access to, or adequate product visibility on, their platform to enable us to meet our growth objectives. Unattractive placement or pricing may put our products at a disadvantage compared to those of our competitors.
Anti-takeover provisions in our amended and restated certificate of incorporation and second amended and restated bylaws, and provisions of Delaware law, could impair a takeover attempt. Our amended and restated certificate of incorporation and second amended and restated bylaws contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests.
Our amended and restated certificate of incorporation and second amended and restated bylaws contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control.
Although the composition of our significant retailers may vary from period-to-period, we expect most of our sales will continue to come from a relatively small number of retailers for the foreseeable future.
Sales to our next largest retailer, Amazon, represented approximately 18% of consolidated sales in fiscal year 2024. Although the composition of our significant retailers may vary from period to period, we expect most of our sales will continue to come from a relatively small number of retailers for the foreseeable future.
Because of the COVID-19 pandemic, transport restrictions have been put in place and global supply was and may become again in the future constrained, each of which may cause and have caused price increases or shortages of certain ingredients and raw materials used in our products. In addition we may experience disruptions to our operations.
Because of the COVID-19 pandemic, transport restrictions were put in place and global supply was constrained, each of which caused price increases or shortages of certain ingredients and raw materials used in our products.
We compete in this market against numerous multinational, regional and local companies principally based on our nutritional content, product taste and quality, our brand recognition and loyalty, marketing, advertising, price and the ability to satisfy specific consumer dietary needs.
We compete in this market against numerous multinational, regional and local companies principally based on our nutritional content, product taste and quality, our brand recognition and loyalty, marketing, advertising, price and the ability to satisfy specific consumer dietary needs. An increasing focus on macronutrient-focused products in the marketplace will likely increase these competitive pressures within the category in future periods.
Our ability to expand successfully our nutritional snacking brands and other growth strategies depends on, among other things, our ability to identify, and successfully cater to, new demographics and consumer trends, develop new and innovative products, identify and acquire additional product lines and businesses, secure shelf space in grocery stores, wholesale clubs and other retailers, increase consumer awareness of our 17 brands, enter into distribution and other strategic arrangements with third-party retailers and other potential distributors of our products, and compete with numerous other companies and products.
Our ability to expand successfully our nutritional snacking brands and other growth strategies depends on, among other things, our ability to identify, and successfully cater to, new demographics and consumer trends, develop new and innovative products, identify and acquire additional product lines and businesses, secure shelf space in grocery stores, wholesale clubs and other retailers, increase consumer awareness of our brands, enter into distribution and other strategic arrangements with third-party retailers and other potential distributors of our products, and compete with numerous other companies and products. 18 In addition, low carbohydrate eating lifestyle consumers of our products and those consumers using chronic weight management medication to support their weight loss goals may have different preferences and spending habits than the consumers of traditional weight loss products.
Therefore, except as provided above, these parties have no duty to communicate or present corporate opportunities to us, and have the right to either hold any corporate opportunity for their (and their affiliates’) own account and benefit or to recommend, assign or otherwise transfer such corporate opportunity to persons other than us. 31 As a result, certain of our stockholders, directors and their respective affiliates are not prohibited from operating or investing in competing businesses.
Therefore, except as provided above, these parties have no duty to communicate or present corporate opportunities to us, and have the right to either hold any corporate opportunity for their (and their affiliates’) own account and benefit or to recommend, assign or otherwise transfer such corporate opportunity to persons other than us.
Most of our other customers pick-up their orders at our distribution centers and arrange for delivery to their fulfillment network. A small percentage of our customers are shipped certain products directly from a co-manufacturing location. We rely significantly on the orderly operation of our distributions centers and logistics providers.
A small percentage of our customers are shipped certain products directly from a co-manufacturing location. We rely significantly on the orderly operation of our distributions centers and logistics providers.
We expect to continue focusing on nutritional snacking and intend to add additional brands to our product portfolio.
We expect to continue focusing on nutritional snacking and intend to add additional brands to our product portfolio, such as OWYN, which we acquired during fiscal year 2024.
We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Together these provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Even the perceived risk of infection or health risk may adversely affect traffic to our store-based retail customers and, in turn, our business, liquidity, financial condition and results of operations, particularly if any mobility restrictions are in place for significant time.
Even the perceived risk of infection or health risk may adversely affect traffic to our store-based retail customers and, in turn, our business, liquidity, financial condition and results of operations, particularly if any mobility restrictions are in place for significant time. 20 The spread of pandemics, epidemics or disease outbreaks such as COVID-19 may also disrupt our third-party business partners’ ability to meet their obligations to us, which may negatively affect our operations.
The actual or perceived effects of a disease outbreak, epidemic, pandemic or similar widespread public health concern, such as COVID-19, could negatively affect our operations, liquidity, financial condition and results of operations.
The actual or perceived effects of a disease outbreak, epidemic, pandemic or similar widespread public health concern, such as COVID-19, could negatively affect our operations, liquidity, financial condition and results of operations. Pandemics, epidemics or disease outbreaks may affect demand for our products because quarantines or other government restrictions on movement may cause erratic consumer purchase behavior.
Furthermore, as retailers consolidate or account for a larger percentage of our sales, they may reduce the number of branded products they offer to accommodate private label products and pressure us to lower the prices of our products.
Furthermore, as retailers consolidate or account for a larger percentage of our sales, they may reduce the number of branded products they offer to accommodate private label products and pressure us to lower the prices of our products. 23 The loss of, a disruption in or an inability to efficiently operate our fulfillment network could materially and adversely affect our business, financial condition, and results of operations.
Future core ingredient and packaging prices may be affected by new laws or regulations, tariffs, suppliers’ allocations to other purchasers, interruptions in production by suppliers, natural disasters, volatility in the price of crude oil and related petrochemical products and changes in exchange rates.
Future core ingredient and packaging prices may be affected by new laws or regulations, tariffs, suppliers’ allocations to other purchasers, interruptions in production by suppliers, natural disasters, volatility in the price of crude oil and related petrochemical products and changes in exchange rates. 21 Shortages or interruptions in the supply or delivery of our core ingredients, packaging, products or equipment we purchase could materially and adversely affect our operating results as we rely on a limited number of third-party suppliers to supply our core ingredients and packaging and a limited number of contract manufacturers to manufacture our products.
A widespread recall or withdrawal of any of ours or licensed products may negatively and significantly affect our sales and profitability and could cause significant losses depending on the costs of the recall, destruction of product inventory, reduction in product availability, and reaction of competitors and consumers.
A widespread recall or withdrawal of any of ours or licensed products may negatively and significantly affect our sales and profitability and could cause significant losses depending on the costs of the recall, destruction of product inventory, reduction in product availability, and reaction of competitors and consumers. 22 We may be subject to claims or lawsuits, including class actions lawsuits (which could significantly increase any adverse settlements or rulings) or judgments, resulting in liability for actual or claimed injuries, illness or death.
A change in consumer discretionary spending, due to inflationary pressures, economic downturn or other reasons may also materially and adversely affect our sales, and our business, financial condition and results of operations.
A change in consumer discretionary spending, due to inflationary pressures, economic downturn or other reasons may also materially and adversely affect our sales, and our business, financial condition and results of operations. We may not be able to compete successfully in the highly competitive nutritional snacking industry. Our business is committed to providing people a more nutritious way to eat.
Effective internal control over financial reporting is necessary for us to provide reliable financial reports. In May 2021 we identified a material weakness in our internal control over financial reporting. In the future, we may discover areas of our internal control over financial reporting that need improvement.
Effective internal control over financial reporting is necessary for us to provide reliable financial reports. In the future, we may discover areas of our internal control over financial reporting that need improvement. In addition, our internal financial and accounting team is leanly staffed, which can lead to inefficiencies regarding segregation of duties.
In addition, we maintain “at-will” contracts with these retailers, which do not require recurring or minimum purchase amounts of our products. A substantial majority of our sales are generated from a limited number of retailers.
We rely on sales to a limited number of retailers for a substantial portion of our net sales and losing one or more such retailers may materially harm our business. In addition, we maintain “at-will” contracts with these retailers, which do not require recurring or minimum purchase amounts of our products.
Whether or not SOFR attains market traction as a LIBOR replacement tool remains in question At this time, it is not possible to predict the effect of any establishment of alternative reference rates or any other reforms that may be enacted in the United Kingdom or elsewhere.
At this time, it is not possible to predict the effect of any establishment of alternative reference rates or any other reforms that may be enacted in the United Kingdom or elsewhere. Uncertainty as to the nature of such potential changes, alternative reference rates, including SOFR, or other reforms may adversely affect the trading market for SOFR-based securities, including ours.
We therefore may find ourselves in competition with certain of our stockholders, directors or their respective affiliates, and we may not know of, or be able to pursue, transactions that could potentially be beneficial to us. Accordingly, we may lose a corporate opportunity or suffer competitive harm, which could negatively affect our business or prospects.
As a result, certain of our stockholders, directors and their respective affiliates are not prohibited from operating or investing in competing businesses. We therefore may find ourselves in competition with certain of our stockholders, directors or their respective affiliates, 32 and we may not know of, or be able to pursue, transactions that could potentially be beneficial to us.
Additionally, we may be adversely affected if suppliers stop selling to us or enter into arrangements that impair their abilities to provide us with core ingredients and packaging. We rely on a limited number of contract manufacturers to manufacture our products.
We may not be able to identify and qualify new suppliers of core ingredients promptly, which could adversely affect our ability to make timely deliveries of products. Additionally, we may be adversely affected if suppliers stop selling to us or enter into arrangements that impair their abilities to provide us with core ingredients and packaging.
Sales to our largest retailer, Walmart, represented approximately 31% of consolidated sales in fiscal year 2023, of which approximately 24% is through their mass retail channel and approximately 7% is through their Sam’s club and e-commerce channels. Sales to our next largest retailer, Amazon, represented approximately 16% of consolidated sales in fiscal year 2023.
A substantial amount of our sales are generated from a limited number of retailers. Sales to our largest retailer customer, Walmart Inc., represented approximately 31% of consolidated sales in fiscal year 2024, of which approximately 23% is through their mass retail channel and approximately 8% is through their Sam’s club and e-commerce channels.
Our operations are dependent on a global supply chain and effects of supply chain constraints and inflationary pressure on us or our suppliers could adversely affect our operating results. Our operations and the operations of our contract manufacturers have been, and may continue to be, affected by supply chain constraints and packaging, ingredient and labor challenges resulting in increased costs.
Our operations are dependent on a global supply chain and the effects of supply chain constraints and inflationary pressure on us, or our suppliers could adversely affect our operating results.
In addition, our internal financial and accounting team is leanly staffed, which can lead to inefficiencies regarding segregation of duties. If we fail to properly and efficiently maintain an effective internal control over financial reporting, we could fail to report our financial results accurately.
If we fail to properly and efficiently maintain an effective internal control over financial reporting, we could fail to report our financial results accurately.
The continuing uncertain economic environment, and macroeconomic and geopolitical events and trends may increase these risks. In addition, current or future governmental policies may increase the risk of further inflation, which could further increase the costs of ingredients, packaging and finished goods for our business.
In addition, current or future governmental policies or regulations or the effects on certain ingredients resulting from climate change or regulations associated with combating climate change may increase the risk of further inflation, which could further increase the costs of ingredients, packaging and finished goods for our business.
Volatility in the prices of the core ingredients and other supplies we purchase increased in fiscal year 2023 and, while these 20 price increases have begun to moderate, these prices may remain elevated during fiscal year 2024. As a result, our cost of goods sold increased in fiscal year 2023, and our profitability was reduced.
Volatility in the prices of the core ingredients and other supplies we purchase increased in recent fiscal years and, while these price increases have begun to moderate for some core ingredients and other supplies, we anticipate increases in the cost of certain core ingredients and supplies during fiscal year 2025.
Furthermore, stock prices for many companies fluctuate widely for reasons that may be unrelated to their operating results. Those fluctuations and general economic, political and market conditions, such as recessions or international currency fluctuations and demand for our services, may adversely affect the market price of our common stock.
Those fluctuations and general economic, political and market conditions, such as recessions or international currency fluctuations and demand for our services, may adversely affect the market price of our common stock. 30 We do not expect to declare any dividends in the foreseeable future.
Adverse and uncertain economic conditions, such as those caused by the inflationary environment first experienced in fiscal year 2022 and which continued in fiscal year 2023, geopolitical events and COVID-19, have, in the past affected, and, in the future, may affect distributor, retailer and consumer demand for our products.
Other Risks Disruptions in the worldwide economy may materially and adversely affect our business, financial condition and results of operations. Adverse and uncertain economic conditions, such as those caused by the inflationary environment, geopolitical events and public health emergencies have, in the past affected, and, in the future, may affect distributor, retailer and consumer demand for our products.
For example, the operations of several of our contract manufacturers were affected by the COVID-19 pandemic’s effect on the availability of labor.
These third parties include those who supply our ingredients, packaging, and other necessary operating materials, contract manufacturers, distributors, and logistics and transportation services providers. For example, the operations of several of our contract manufacturers were affected by the COVID-19 pandemic’s effect on the availability of labor.
Such changes may have an adverse effect on our business, financial position and operating results, or cause an adverse deviation from our revenue and operating profit targets, which may negatively affect our financial results.
Such changes may have an adverse effect on our business, financial position and operating results, or cause an adverse deviation from our revenue and operating profit targets, which may negatively affect our financial results. 29 As a result, we expect to incur additional expenses to meet these reporting expectations as well as any climate related reporting mandated in the future by government regulations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease two distribution centers in Greenfield, Indiana. We utilize over 1.29 million square feet of floor space among our distribution centers.
Biggest changeWe also lease two distribution centers in Greenfield, Indiana. We utilize over 1.29 million square feet of floor space among our distribution centers. Having completed the OWYN Acquisition in June 2024, we are currently evaluating the OWYN brand’s warehouse operations and integration activities.
Added
For OWYN, we currently utilize a total of 200,000 square feet of floor space in four warehouses for finished goods which are located in Greenfield, Indiana, Greenwood, Indiana, Romeoville, Illinois and Hackettstown, New Jersey.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAnnual Return Percentage Fiscal Years Ending Company Name / Index August 25, 2018 August 31, 2019 August 29, 2020 August 28, 2021 August 27, 2022 August 26, 2023 The Simply Good Foods Company $ 100.00 $ 164.79 $ 141.21 $ 196.61 $ 175.25 $ 191.66 S&P 500 Index $ 100.00 $ 101.80 $ 122.03 $ 156.86 $ 141.15 $ 153.26 S&P 500 Packaged Foods & Meats Index $ 100.00 $ 107.49 $ 116.37 $ 116.07 $ 129.17 $ 123.53
Biggest changeAnnual Return Percentage Fiscal Years Ending Company Name / Index August 31, 2019 August 29, 2020 August 28, 2021 August 27, 2022 August 26, 2023 August 31, 2024 The Simply Good Foods Company $ 100.00 $ 85.69 $ 119.30 $ 106.34 $ 116.30 $ 106.01 S&P 500 Index $ 100.00 $ 119.87 $ 154.09 $ 138.65 $ 149.99 $ 191.79 S&P 500 Packaged Foods & Meats Index $ 100.00 $ 108.26 $ 107.98 $ 120.17 $ 114.91 $ 115.37
We may suspend or discontinue the stock repurchase program at any time, and the stock repurchase program does not have an expiration date. 33 Performance Graph The following stock performance graph compares the cumulative total stockholder return over the last five fiscal years for (i) the Company’s common stock, (ii) the Standard & Poor’s 500 Index, and (iii) the Standard & Poor’s 500 Packaged Foods & Meats Index.
We may suspend or discontinue the stock repurchase program at any time, and the stock repurchase program does not have an expiration date. 35 Performance Graph The following stock performance graph compares the cumulative total stockholder return over the last five fiscal years for (i) the Company’s common stock, (ii) the Standard & Poor’s 500 Index, and (iii) the Standard & Poor’s 500 Packaged Foods & Meats Index.
We did not repurchase any shares of our common stock under our stock repurchase program during the quarter ended August 26, 2023. As of August 26, 2023, approximately $71.5 million remained available under the stock repurchase program. Under the stock repurchase program, we may repurchase shares from time to time in the open market or in privately negotiated transactions.
We did not repurchase any shares of our common stock under our stock repurchase program during the quarter ended August 31, 2024. As of August 31, 2024, approximately $71.5 million remained available under the stock repurchase program. Under the stock repurchase program, we may repurchase shares from time to time in the open market or in privately negotiated transactions.
The graph assumes the value of the investment in our common stock and each index was $100.00 on August 25, 2018 and assumes reinvestment of any dividends. The stock price performance below is not necessarily indicative of future stock price performance.
The graph assumes the value of the investment in our common stock and each index was $100.00 on August 31, 2019, and assumes reinvestment of any dividends. The stock price performance below is not necessarily indicative of future stock price performance.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information and Holders Our common stock is currently quoted on the Nasdaq Capital Market under the symbol “SMPL.” As of October 18, 2023, there were 99,603,880 shares outstanding and 13 record holders of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information and Holders Our common stock is currently quoted on the Nasdaq Capital Market under the symbol “SMPL.” As of October 18, 2024, there were 100,221,529 shares outstanding and 10 record holders of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeA discussion regarding our financial condition and results of operations for the fifty-two weeks ended August 27, 2022 compared to the fifty-two weeks ended August 28, 2021 can be found under Item 7 of our Annual Report on Form 10-K for the fiscal year ended August 27, 2022, filed with the SEC on October 21, 2022. 36 Comparison of Results for the Fifty-Two Weeks Ended August 26, 2023 and the Fifty-Two Weeks Ended August 27, 2022 The following table presents, for the periods indicated, selected information from our consolidated financial results, including information presented as a percentage of net sales: 52-Weeks Ended % of Net Sales 52-Weeks Ended % of Net Sales (In thousands) August 26, 2023 August 27, 2022 Net sales $ 1,242,672 100.0 % $ 1,168,678 100.0 % Cost of goods sold 789,252 63.5 % 723,117 61.9 % Gross profit 453,420 36.5 % 445,561 38.1 % Operating expenses: Selling and marketing 119,489 9.6 % 121,685 10.4 % General and administrative 111,566 9.0 % 103,832 8.9 % Depreciation and amortization 17,416 1.4 % 17,285 1.5 % Total operating expenses 248,471 20.0 % 242,802 20.8 % Income from operations 204,949 16.5 % 202,759 17.3 % Other income (expense): Interest income 1,144 0.1 % 15 — % Interest expense (30,068) (2.4) % (21,881) (1.9) % Loss in fair value change of warrant liability — — % (30,062) (2.6) % (Loss) gain on foreign currency transactions (344) — % 191 — % Other expense 11 — % (453) — % Total other expense (29,257) (2.4) % (52,190) (4.5) % Income before income taxes 175,692 14.1 % 150,569 12.9 % Income tax expense 42,117 3.4 % 41,995 3.6 % Net income $ 133,575 10.7 % $ 108,574 9.3 % Other financial data: Adjusted EBITDA (1) $ 245,555 19.8 % $ 234,043 20.0 % (1) Adjusted EBITDA is a non-GAAP financial metric.
Biggest changeA discussion regarding our financial condition and results of operations for the fifty-two weeks ended August 26, 2023, compared to the fifty-two weeks ended August 27, 2022, can be found under Item 7 of our Annual Report on Form 10-K for the fiscal year ended August 26, 2023, filed with the SEC on October 24, 2023. 38 Comparison of Results for the Fifty-Three Weeks Ended August 31, 2024, and the Fifty-Two Weeks Ended August 26, 2023 The following table presents, for the periods indicated, selected information from our consolidated financial results, including information presented as a percentage of net sales: 53-Weeks Ended % of Net Sales 52-Weeks Ended % of Net Sales (In thousands) August 31, 2024 August 26, 2023 Net sales $ 1,331,321 100.0 % $ 1,242,672 100.0 % Cost of goods sold 819,755 61.6 % 789,252 63.5 % Gross profit 511,566 38.4 % 453,420 36.5 % Operating expenses: Selling and marketing 143,929 10.8 % 119,489 9.6 % General and administrative 129,699 9.7 % 111,566 9.0 % Depreciation and amortization 16,917 1.3 % 17,416 1.4 % Business transaction costs 14,524 1.1 % — — % Total operating expenses 305,069 22.9 % 248,471 20.0 % Income from operations 206,497 15.5 % 204,949 16.5 % Other income (expense): Interest income 4,307 0.3 % 1,144 0.1 % Interest expense (26,029) (2.0) % (30,068) (2.4) % Gain (loss) on foreign currency transactions 267 — % (344) — % Other expense 1,008 0.1 % 11 — % Total other income (expense) (20,447) (1.5) % (29,257) (2.4) % Income before income taxes 186,050 14.0 % 175,692 14.1 % Income tax expense 46,741 3.5 % 42,117 3.4 % Net income $ 139,309 10.5 % $ 133,575 10.7 % Other financial data: Adjusted EBITDA (1) $ 269,130 20.2 % $ 245,555 19.8 % (1) Adjusted EBITDA is a non-GAAP financial metric.
Our fiscal quarters are comprised of thirteen weeks each, except for fifty-three week fiscal periods for the which the fourth quarter is comprised of fourteen weeks, and end on the thirteenth Saturday of each quarter (fourteenth Saturday of the fourth quarter, when applicable).
Our fiscal quarters are comprised of thirteen weeks each, except for fifty-three week fiscal periods for which the fourth quarter is comprised of fourteen weeks, and end on the thirteenth Saturday of each quarter (fourteenth Saturday of the fourth quarter, when applicable).
These estimates are made using various information including historical data on performance of similar trade promotional activities, market data from IRI, and the Company’s best estimates of current activity. Our consolidated financial statements could be materially affected if the actual promotion rates are different from the estimated rates.
These estimates are made using various information including historical data on the performance of similar trade promotional activities, market data from IRI, and the Company’s best estimates of current activity. Our consolidated financial statements could be materially affected if the actual promotion rates are different from the estimated rates.
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 Atkins® and Quest® 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.
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. 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.
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) 1.50% margin for the Term Loan or (y) 2.00% margin for the Revolving Credit Facility; or ii.
A base rate equaling the higher of (a) the “prime rate,” (b) the federal funds effective rate plus 0.50%, or (c) the Adjusted Term SOFR Rate (as defined in the Credit Agreement) applicable for an interest period of one month plus 2.50% plus (x) 1.50% margin for the Term Loan or (y) 2.00% margin for the Revolving Credit Facility; or 42 ii.
Uncertainties related to the estimate of variable consideration are resolved in a short time frame and do not require any additional constraint on variable consideration. Adjustments to variable consideration have historically been insignificant. 42 Although some payment terms may be longer, the majority of our payment terms are less than 60 days.
Uncertainties related to the estimate of variable consideration are resolved in a short time frame and do not require any additional constraint on variable consideration. Adjustments to variable consideration have historically been insignificant. Although some payment terms may be longer, the majority of our payment terms are less than 60 days.
Our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, of our Consolidated Financial Statements in this filing; however, the following discussion pertains to accounting policies we believe are most critical to the portrayal of its financial condition and results of operations and that require significant, difficult, subjective or complex judgments.
Our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, of our Consolidated Financial Statements in this filing; however, the following discussion pertains to accounting policies we believe are most critical to the portrayal of its financial condition and results of operations and that require significant, difficult, subjective or 44 complex judgments.
Goodwill and Other Intangible Assets Goodwill and indefinite-lived intangible assets, comprising our brands and trademarks, are not amortized, but instead are tested for impairment at least annually, or more frequently if indicators of impairment exist. We conduct our annual impairment tests at the beginning of the fourth fiscal quarter.
Goodwill and Other Intangible Assets Goodwill and indefinite-lived intangible assets, comprising our brands and trademarks, are not amortized, but instead are tested for impairment at least annually, or more frequently if indicators of impairment exist. We conduct our annual impairment tests at the beginning of 45 the fourth fiscal quarter.
We also have intangible assets that have determinable useful lives, consisting primarily of customer relationships, proprietary recipes and formulas, licensing agreements, and software and website development costs. Costs of these finite-lived intangible assets are 43 amortized on a straight-line basis over their estimated useful lives.
We also have intangible assets that have determinable useful lives, consisting primarily of customer relationships, proprietary recipes and formulas, licensing agreements, and software and website development costs. Costs of these finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives.
We continue to monitor customer and consumer demand along with our supply chain and logistics capabilities and intend to adapt our plans as needed to continue to drive our business and meet our obligations. 35 Please also see the information under Item 1A.
We continue to monitor customer and consumer demand along with our supply chain and logistics capabilities and intend to adapt our plans as needed to continue to drive our business and meet our obligations. Please also see the information under Item 1A.
As a result, we do not have any material significant payments terms as payment is received shortly after the time of sale. While our revenue recognition does not involve significant judgment, it represents a key accounting policy. Trade Promotions We offer trade promotions through various programs to customers and consumers. Trade promotions include discounts, rebates, slotting and other marketing activities.
As a result, we do not have any material significant payments’ terms as payment is received shortly after the time of sale. While our revenue recognition does not involve significant judgment, it represents a key accounting policy. Trade Promotions We offer trade promotions through various programs to customers and consumers. Trade promotions include discounts, rebates, slotting and other marketing activities.
Significant management judgment is required in determining the effective tax rate, evaluating tax positions and determining the net realizable value of deferred tax assets. Warrant Liability During the fifty-two weeks ended August 27, 2022 and August 28, 2021, we had outstanding Private Warrants that allowed holders to purchase 6,700,000 shares of our common stock.
Significant management judgment is required in determining the effective tax rate, evaluating tax positions and determining the net realizable value of deferred tax assets. Warrant Liability During the fifty-two weeks ended August 27, 2022, we had outstanding Private Warrants that allowed holders to purchase 6,700,000 shares of our common stock.
Revisions can include changes for consideration paid to customers that lack sufficient evidence to support a distinct good or service assertion, or for which a reasonably estimable fair value cannot be determined, primarily related to our assessments of cooperative advertising programs. We review these estimates regularly and makes revisions as necessary.
Revisions can include changes for consideration paid to customers that lack sufficient evidence to support a distinct good or service assertion, or for which a reasonably estimable fair value cannot be determined, primarily related to our assessments of cooperative advertising programs. We review these estimates regularly and make revisions as necessary.
Overview 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, as well as other product offerings.
Overview 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.
Management uses EBITDA and Adjusted EBITDA to supplement net income because these measures reflect operating results of the on-going operations, eliminate items that are not directly attributable to our underlying operating performance, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to the key metrics management uses in its financial and operational decision making.
Management of the Company uses EBITDA and Adjusted EBITDA to supplement net income because these measures reflect operating results of the on-going operations, eliminate items that are not directly attributable to the Company’s underlying operating performance, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to the key metrics the Company’s management uses in its financial and operational decision making.
New Accounting Pronouncements Refer to Note 2, Summary of Significant Accounting Policies, of the Consolidated Financial Statements included in Item 8 of this Report for information regarding recently issued accounting standards. 44
New Accounting Pronouncements Refer to Note 2, Summary of Significant Accounting Policies, of the Consolidated Financial Statements included in Item 8 of this Report for information regarding recently issued accounting standards. 47
Accordingly, no further impairment assessment was necessary, and no impairment charges related to goodwill or indefinite-lived intangibles were recognized in the fifty-two weeks ended August 26, 2023, August 27, 2022, or August 28, 2021. Additionally, we determined there was not a material risk of impairments as of the date of the most recent assessment.
Accordingly, no further impairment assessment was necessary, and no impairment charges related to goodwill or indefinite-lived intangibles were recognized in the fifty-three weeks ended August 31, 2024, or the fifty-two weeks ended August 26, 2023, or August 27, 2022. Additionally, we determined there was not a material risk of impairments as of the date of the most recent assessment.
Refer to Note 6, Long-Term Debt and Line of Credit, and Note 9, Leases, of the Consolidated Financial Statements included in Item 8 of this Report for additional information related to the expected timing and amount of payments related to our contractual and other obligations.
Refer to Note 7, Long-Term Debt and Line of Credit, and Note 10, Leases, of the Consolidated Financial Statements included in Item 8 of this Report for additional information related to the expected timing and amount of payments related to our contractual and other obligations.
For the fifty-two weeks ended August 26, 2023, August 27, 2022 and August 28, 2021, we did not identify indicators of impairment related to our finite-lived intangible assets, and as such there were no impairments recorded related to finite-lived intangible assets.
For the fifty-three weeks ended August 31, 2024, and the fifty-two weeks ended August 26, 2023, and August 27, 2022, we did not identify indicators of impairment related to our finite-lived intangible assets, and as such there were no impairments recorded related to finite-lived intangible assets.
On April 25, 2023, we entered into the “2023 Repricing Amendment” to the Credit Agreement.
On April 25, 2023, the Company entered into the “2023 Repricing Amendment” to the Credit Agreement.
Our fiscal quarters for fiscal 2023 ended on November 26, 2022, February 25, 2023, May 27, 2023 and August 26, 2023. Unless the context requires otherwise in this Report, the terms “we,” “us,” “our,” the “Company” and “Simply Good Foods” refer to The Simply Good Foods Company and its subsidiaries.
Our fiscal quarters for fiscal 2024 ended on November 25, 2023, February 24, 2024, May 25, 2024, and August 31, 2024. Unless the context requires otherwise in this Report, the terms “we,” “us,” “our,” the “Company” and “Simply Good Foods” refer to The Simply Good Foods Company and its subsidiaries.
We were in compliance with all financial covenants as of August 26, 2023 and August 27, 2022, respectively. As of August 26, 2023, the outstanding balance of the Term Facility was $285.0 million. We are not required to make principal payments on the Term Facility over the twelve months following the period ended August 26, 2023.
We were in compliance with all financial covenants as of August 31, 2024, and August 26, 2023, respectively. As of August 31, 2024, the outstanding balance of the Term Facility was $400.0 million. We are not required to make principal payments on the Term Facility over the twelve months following the period ended August 31, 2024.
The outstanding balance of the Term Facility is due upon its maturity in March 2027. As of August 26, 2023, there were no amounts drawn against the Revolving Credit Facility.
The outstanding balance of the Term Facility is due upon its maturity in March 2027. As of August 31, 2024, there were no amounts drawn against the Revolving Credit Facility.
Changes in operating activity cash was primarily attributable to an improvement in working capital, comprised of changes in accounts receivable, net, inventories, prepaid expenses, accounts payable, and accrued expenses and other current liabilities, which are driven by the timing of payments and receipts and seasonal building of inventory.
The increase in cash provided by operating activities was primarily attributable to changes in working capital, comprised of changes in accounts receivable, net, inventories, prepaid expenses, accounts payable, and accrued expenses and other current liabilities, which are driven by the timing of payments and receipts and seasonal building of inventory.
Refer to Note 11, Stockholders’ Equity of the Consolidated Financial Statements included in Item 8 of this Report for additional information related to our stock repurchase program. Cash Flows The following table sets forth the major sources and uses of cash for the fifty-two weeks ended August 26, 2023 and August 27, 2022.
Refer to Note 12, Stockholders’ Equity of the Consolidated Financial Statements included in Item 8 of this Report for additional information related to our stock repurchase program. Cash Flows The following table sets forth the major sources and uses of cash for the fifty-three weeks ended August 31, 2024, and August 26, 2023.
Our nutritious snacking platform consists of brands that specialize in providing products for consumers that follow certain nutritional philosophies and health-and-wellness trends: Atkins® for those following a low-carb lifestyle and Quest® for consumers seeking a variety of protein-rich foods and beverages that also limit sugars and simple carbs.
Our nutritious snacking platform consists of brands that specialize in providing products for consumers that follow certain nutritional philosophies and health-and-wellness trends: Quest for consumers seeking a variety of protein-rich foods and beverages that also limit sugars and simple carbs, Atkins for those following a low-carb lifestyle, and OWYN for those looking for a plant-based ready-to-drink protein shake offering.
As of August 26, 2023 and August 27, 2022, the allowance for trade promotions was $28.8 million and $23.9 million, respectively. Differences between estimated expense and actual redemptions are recognized as a change in management estimate in a subsequent period. These differences have historically been insignificant.
As of August 31, 2024, and August 26, 2023, the allowance for trade promotions was $36.3 million and $28.8 million, respectively. Differences between estimated expense and actual redemptions are recognized as a change in management estimate in a subsequent period. These differences have historically been insignificant.
For a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, see “Reconciliation of EBITDA and Adjusted EBITDA” below. 38 Reconciliation of EBITDA and Adjusted EBITDA EBITDA and Adjusted EBITDA are non-GAAP financial measures commonly used in our industry and should not be construed as alternatives to net income as an indicator of operating performance or as alternatives to cash flow provided by operating activities as a measure of liquidity (each as determined in accordance with GAAP).
Reconciliation of EBITDA and Adjusted EBITDA EBITDA and Adjusted EBITDA are non-GAAP financial measures commonly used in our industry and should not be construed as alternatives to net income as an indicator of operating performance or as alternatives to cash flow provided by operating activities as a measure of liquidity (each as determined in accordance with GAAP).
Our net cash used in investing activities was $12.2 million for the fifty-two weeks ended August 26, 2023 compared to $8.2 million for the fifty-two weeks ended August 27, 2022. Our net cash used in investing activities for the fifty-two weeks ended August 26, 2023 primarily comprised $11.6 million of purchases of property and equipment.
The $12.2 million of net cash used in investing activities for the fifty-two weeks ended August 26, 2023, was primarily comprised of $11.6 million purchases of property and equipment. Financing activities.
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. Net sales of $1,242.7 million represented an increase of $74.0 million, or 6.3%, for the fifty-two weeks ended August 26, 2023 compared to the fifty-two weeks ended August 27, 2022.
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. Net sales of $1,331.3 million represented an increase of $88.6 million, or 7.1%, for the fifty-three weeks ended August 31, 2024, compared to the fifty-two weeks ended August 26, 2023.
We believe that EBITDA and Adjusted EBITDA, when used in conjunction with net income, are useful to provide additional information to investors.
The Company believes that EBITDA and Adjusted EBITDA, when used in conjunction with net income, are useful to provide additional information to investors.
Income tax expense increased $0.1 million for the fifty-two weeks ended August 26, 2023 compared to the fifty-two weeks ended August 27, 2022. The increase in our income tax expense is primarily driven by higher income from operations and changes in permanent differences. Net income.
Income tax expense increased $4.6 million for the fifty-three weeks ended August 31, 2024, compared to the fifty-two weeks ended August 26, 2023. The increase in our income tax expense is primarily driven by higher income from operations and changes in permanent differences. Net income.
Simply Good Foods 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, term loan transaction fees, integration costs, restructuring costs, loss in fair value change of warrant liability, and other non-core expenses.
Simply Good Foods 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, inventory step-up, integration costs, term loan transaction fees, and other non-core expenses.
Net cash used in financing activities for the fifty-two weeks ended August 27, 2022 primarily consisted of $50.0 million in principal payments on the Term Facility and $59.9 million in repurchases of common stock. Critical Accounting Policies, Judgments and Estimates General Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S.
Net cash used in financing activities for the fifty-two weeks ended August 26, 2023, primarily consisted of $121.5 million in principal prepayments on the Term Facility and $16.4 million in repurchases of common stock. Critical Accounting Policies, Judgments and Estimates General Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S.
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.
A discussion regarding the major sources and uses of cash for the fifty-two weeks ended August 28, 2021 can be found under Item 7 of our Annual Report on Form 10-K for the fiscal year ended August 27, 2022, filed with the SEC on October 21, 2022. 52-Weeks Ended 52-Weeks Ended (In thousands) August 26, 2023 August 27, 2022 Net cash provided by operating activities $ 171,117 $ 110,639 Net cash used in investing activities $ (12,188) $ (8,156) Net cash used in financing activities $ (138,532) $ (110,032) 41 Operating activities.
A discussion regarding the major sources and uses of cash for the fifty-two weeks ended August 27, 2022, can be found under Item 7 of our Annual Report on Form 10-K for the fiscal year ended August 26, 2023, filed with the SEC on October 24, 2023. 53-Weeks Ended 52-Weeks Ended (In thousands) August 31, 2024 August 26, 2023 Net cash provided by operating activities $ 215,704 $ 171,117 Net cash used in investing activities $ (286,882) $ (12,188) Net cash provided by (used in) financing activities $ 115,901 $ (138,532) Operating activities.
Our fiscal year ends the last Saturday in August. Our fiscal years 2023, 2022, and 2021 ended August 26, 2023, August 27, 2022, and August 28, 2021, respectively, and were each fifty-two week periods.
Our fiscal year ends the last Saturday in August. Our fiscal year 2024 ended August 31, 2024, was a fifty-three week period. Our fiscal years 2023 and 2022 ended August 26, 2023, and August 27, 2022, respectively, were each fifty-two week periods.
Our principal uses of cash have been working capital, debt service, repurchases of our common stock, and acquisition opportunities. We had $87.7 million in cash as of August 26, 2023.
Our principal uses of cash have been working capital, debt service, repurchases of our common stock, and acquisition opportunities. We had $132.5 million in cash as of August 31, 2024.
The Simply Good Foods Company is not a borrower under the Credit Agreement and has not provided a guarantee of the Credit Agreement. Simply Good Foods USA, Inc., is the administrative borrower and certain other subsidiary holding companies are co-borrowers under the Credit Agreement.
Simply Good Foods USA, Inc., is the administrative borrower and certain other subsidiary holding companies are co-borrowers under the Credit Agreement. Each of our domestic subsidiaries that is not a named borrower under the Credit Agreement has provided a guarantee on a secured basis.
On January 7, 2022, Conyers Park elected to exercise the Private Warrants in full on a cashless basis, resulting in a net issuance of 4,830,761 shares of our common stock. As a result of the cashless exercise on January 7, 2022, there were no outstanding Private Warrants as of August 26, 2023 or August 27, 2022.
On January 7, 2022, Conyers Park elected to exercise the Private Warrants in full on a cashless basis, resulting in a net issuance of 4,830,761 shares of our common stock.
Our net cash provided by operating activities increased $60.5 million to $171.1 million for the fifty-two weeks ended August 26, 2023 compared to $110.6 million for the fifty-two weeks ended August 27, 2022.
Our net cash provided by operating activities increased $44.6 million to $215.7 million for the fifty-three weeks ended August 31, 2024, compared to $171.1 million for the fifty-two weeks ended August 26, 2023.
Changes in working capital consumed cash of $21.2 million, an improvement of $42.6 million, in the fifty-two weeks ended August 26, 2023 compared to $63.8 million of cash consumed in the fifty-two weeks ended August 27, 2022.
Changes in working capital provided cash of $21.3 million in the fifty-three weeks ended August 31, 2024, compared to $21.2 million of cash consumed in the fifty-two weeks ended August 26, 2023, an improvement of $42.5 million.
Gross profit as a percentage of net sales was 36.5% for the fifty-two weeks ended August 26, 2023, a decrease of 160 basis points from 38.1% of net sales for the fifty-two weeks ended August 27, 2022.
Gross profit as a percentage of net sales was 38.4% for the fifty-three weeks ended August 31, 2024, an increase of 190 basis points from 36.5% of net sales for the fifty-two weeks ended August 26, 2023.
During the reporting periods the Private Warrants were outstanding, we accounted for our Private Warrants as a derivative warrant liability in accordance with ASC Topic 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity.
As a result of the cashless exercise on January 7, 2022, there were no outstanding Private Warrants as of August 31, 2024, or August 26, 2023. 46 During the reporting periods the Private Warrants were outstanding, we accounted for our Private Warrants as a derivative warrant liability in accordance with ASC Topic 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity.
Impairment is indicated if the estimated fair value of the reporting unit or indefinite-lived intangible asset is less than the carrying amount, and an impairment charge is recognized for the differential. For fiscal year 2023, 2022 and 2021, we performed qualitative assessments of goodwill and indefinite-lived intangible assets.
Impairment is indicated if the estimated fair value of the reporting unit or indefinite-lived intangible asset is less than the carrying amount, and an impairment charge is recognized for the differential. During fiscal year 2024, we performed a qualitative assessment in the fiscal third quarter that indicated potential indicators of impairment for the Atkins brand indefinite lived intangible asset.
Net income was $133.6 million for the fifty-two weeks ended August 26, 2023, an increase of $25.0 million, compared to net income of $108.6 million for the fifty-two weeks ended August 27, 2022.
Net income was $139.3 million for the fifty-three weeks ended August 31, 2024, an increase of $5.7 million, compared to net income of $133.6 million for the fifty-two weeks ended August 26, 2023.
Our net cash used in financing activities was $138.5 million for the fifty-two weeks ended August 26, 2023 compared to $110.0 million for the fifty-two weeks ended August 27, 2022.
Our net cash provided by financing activities was $115.9 million for the fifty-three weeks ended August 31, 2024, compared to the net cash used by financing activities of $138.5 million for the fifty-two weeks ended August 26, 2023.
General and administrative expenses comprise expenses associated with corporate and administrative functions that support our business, including employee compensation, stock-based compensation, professional services, integration costs, restructuring costs, insurance and other general corporate expenses. • Depreciation and amortization. Depreciation and amortization costs consist of costs associated with the depreciation of fixed assets and capitalized leasehold improvements and amortization of intangible assets.
Selling and marketing expenses comprise broker commissions, customer marketing, media and other marketing costs. • 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. • Depreciation and amortization.
Depreciation and amortization expenses were $17.4 million and $17.3 million for the fifty-two weeks ended August 26, 2023 compared to the fifty-two weeks ended August 27, 2022, respectively. Interest income.
Depreciation and amortization expenses were $16.9 million and $17.4 million for the fifty-three weeks ended August 31, 2024, compared to the fifty-two weeks ended August 26, 2023, respectively. • Business transaction costs.
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 fifty-two weeks ended August 26, 2023 and August 27, 2022: 52-Weeks Ended 52-Weeks Ended (In thousands) August 26, 2023 August 27, 2022 Net income $ 133,575 $ 108,574 Interest income (1,144) (15) Interest expense 30,068 21,881 Income tax expense 42,117 41,995 Depreciation and amortization 20,253 19,299 EBITDA 224,869 191,734 Stock-based compensation expense 14,480 11,697 Executive transition costs 3,390 — Term loan transaction fees 2,423 — Integration of Quest — 468 Restructuring — 98 Loss in fair value change of warrant liability — 30,062 Other (1) 393 (16) Adjusted EBITDA $ 245,555 $ 234,043 (1) Other items consist principally of exchange impact of foreign currency transactions and other expenses. 39 Liquidity and Capital Resources Overview We have historically funded our operations with cash flow from operations and, when needed, with borrowings under our Credit Agreement (as defined below).
EBITDA and Adjusted EBITDA may not be comparable to other similarly titled captions of other companies due to differences in the non-GAAP calculation. 40 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 fifty-three weeks ended August 31, 2024, and fifty-two weeks ended August 26, 2023: 53-Weeks Ended 52-Weeks Ended (In thousands) August 31, 2024 August 26, 2023 Net income $ 139,309 $ 133,575 Interest income (4,307) (1,144) Interest expense 26,029 30,068 Income tax expense 46,741 42,117 Depreciation and amortization 20,993 20,253 EBITDA 228,765 224,869 Stock-based compensation expense 18,421 14,480 Executive transition costs 3,871 3,390 Business transaction costs 14,524 — Inventory step-up 3,226 — Integration of OWYN 588 — Term loan transaction fees — 2,423 Other (1) (265) 393 Adjusted EBITDA $ 269,130 $ 245,555 (1) Other items consist principally of exchange impact of foreign currency transactions and other expenses. 41 Liquidity and Capital Resources Overview We have historically funded our operations with cash flow from operations and, when needed, with borrowings under our Credit Agreement (as defined below).
See “Reconciliation of EBITDA and Adjusted EBITDA” below for a reconciliation of EBITDA and Adjusted EBITDA to net income for each applicable period. A discussion regarding our financial condition and results of operations for the fifty-two weeks ended August 26, 2023 compared to the fifty-two weeks ended August 27, 2022 is presented below.
A discussion regarding our financial condition and results of operations for the fifty-three weeks ended August 31, 2024, compared to the fifty-two weeks ended August 26, 2023, is presented below.
Gross profit of $453.4 million increased $7.9 million, or 1.8%, for the fifty-two weeks ended August 26, 2023 compared to the fifty-two weeks ended August 27, 2022.
Gross profit of $511.6 million increased $58.1 million, or 12.8%, for the fifty-three weeks ended August 31, 2024, compared to the fifty-two weeks ended August 26, 2023.
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. 40 In connection with the closing of the 2023 Repricing Amendment, we 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).
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.
Previously, during the fifty-two weeks ended August 28, 2021, we had two operating segments, Atkins and Quest, which were aggregated into one reporting segment due to similar financial, economic and operating characteristics.
For the fifty-three weeks ended August 31, 2024, following the OWYN Acquisition, we determined our operations are organized into two operating segments, Quest and Atkins, and OWYN, which are aggregated into one reporting segment, due to similar financial, economic and operating characteristics.
Operating expenses increased $5.7 million, or 2.3%, for the fifty-two weeks ended August 26, 2023 compared to the fifty-two weeks ended August 27, 2022 due to the following: 37 • Selling and marketing .
Operating expenses increased $56.6 million, or 22.8%, for the fifty-three weeks ended August 31, 2024, compared to the fifty-two weeks ended August 26, 2023, due to the following: 39 • Selling and marketing . Selling and marketing expenses increased $24.4 million, or 20.5%, for the fifty-three weeks ended August 31, 2024, compared to the fifty-two weeks ended August 26, 2023.
No additional debt was incurred, or any proceeds received by us 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: i.
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 date of the 2024 Incremental Facility Amendment, the interest rate per annum for the Initial Term Loans is based on either: i.
We also believe that EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. 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 Company also believes that EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industry.
We did not repurchase any shares of common stock during the fifty-two weeks ended August 28, 2021. As of August 26, 2023, approximately $71.5 million remained available for repurchases under our $150.0 million stock repurchase program.
During the fifty-two weeks ended August 27, 2022, the Company repurchased 1,720,520 shares of common stock at an average share price of $34.79 per share. As of August 31, 2024, approximately $71.5 million remained available for repurchases under our $150.0 million stock repurchase program.
Our Reportable Segment For each of the fifty-two weeks ended August 26, 2023 and August 27, 2022, we determined our operations are organized into one, consolidated operating segment and reportable segment based on the following: • Our Atkins® and Quest® brands are closely aligned in the nature of our production processes, the brands’ product offerings, and the methods used to distribute our products to customers; • Our organizational structure is designed to support entity-wide business functions across brands, products, customers, and geographic regions; and, • Our chief operating decision maker reviews operating results and forecasts at the consolidated level.
The Company also designed its organizational structure to support entity-wide business functions across brands, products, customers, and geographic regions. Previously, during the fifty-two weeks ended August 26, 2023, and August 27, 2022, we determined our operations were organized into one, consolidated operating segment and reportable segment.
Cost of goods sold increased $66.1 million, or 9.1%, for the fifty-two weeks ended August 26, 2023 compared to the fifty-two weeks ended August 27, 2022. The cost of goods sold increase was primarily driven by higher raw material, packaging and logistics costs. Gross profit.
Cost of goods sold increased $30.5 million, or 3.9%, for the fifty-three weeks ended August 31, 2024, compared to the fifty-two weeks ended August 26, 2023. The cost of goods sold increase was primarily driven by higher sales volumes and the effect of the non-cash $3.2 million inventory step-up charge related to the OWYN Acquisition. Gross profit.
Interest income was $1.1 million for the fifty-two weeks ended August 26, 2023 compared to an immaterial amount of interest income for the fifty-two weeks ended August 27, 2022, primarily due to the increase in interest rates. Interest expense.
Interest income. Interest income increased $3.2 million or 276.5% to $4.3 million for the fifty-three weeks ended August 31, 2024, compared to $1.1 million of interest income for the fifty-two weeks ended August 26, 2023, primarily due to higher cash balances, the increase in interest rates, and other sources of interest income. Interest expense.
Our business performance for the fiscal year ended August 26, 2023 was affected by unfavorable raw material costs, higher co-manufacturing costs, and supply chain challenges, including supply chain disruptions resulting from labor shortages and disruptions in sourcing ingredients.
Business Trends Our consolidated results of operations for the fiscal year ended August 31, 2024, were driven by volume, an additional week of activity with fiscal year 2024 having fifty-three weeks, and successfully completing the OWYN Acquisition; and the reversal of the unfavorable effects of higher raw material costs, higher co-manufacturing costs, and supply chain challenges including supply chain disruptions resulting from labor shortages and disruptions in ingredients in fiscal year 2023.
In assessing the performance of our business, we consider a number of key performance indicators used by management and typically used by our competitors, including the non-GAAP measures EBITDA and Adjusted EBITDA. Because not all companies use identical calculations, this presentation of EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.
We will continue to invest in our business and improve our operating efficiencies as well as proceeding with the integration of OWYN. In assessing the performance of our business, we consider a number of key performance indicators used by management and typically used by our competitors, including the non-GAAP measures EBITDA and Adjusted EBITDA.
These costs include the purchase of raw ingredients, packaging, shipping and handling, warehousing, depreciation of warehouse equipment, and a tolling charge for the contract manufacturer. Cost of goods sold includes products provided at no charge as part of promotions and the non-food materials provided with customer orders. Operating expenses.
Cost of goods sold consists primarily of the costs we pay to our contract manufacturing partners to produce the products sold. These costs include the purchase of raw ingredients, packaging, shipping and handling, warehousing, depreciation of warehouse equipment, and a tolling charge payable to the contract manufacturer.
Selling and marketing expenses decreased $2.2 million, or 1.8%, for the fifty-two weeks ended August 26, 2023 compared to the fifty-two weeks ended August 27, 2022, primarily related to a reduction in marketing spend. • General and administrative .
The increase was primarily related to increased investments in marketing growth initiatives of $20.1 million and the OWYN Acquisition of $2.1 million. • General and administrative . General and administrative expenses increased $18.1 million, or 16.3%, for the fifty-three weeks ended August 31, 2024, compared to the fifty-two weeks ended August 26, 2023.
Additionally, interest expense related to the amortization of deferred financing costs and debt discount increased $0.2 million for the fifty-two weeks ended August 26, 2023 compared to the fifty-two weeks ended August 27, 2022. Loss in fair value change of warrant liability .
Additionally, interest expense related to the amortization of deferred financing costs and debt discount decreased $0.7 million for the fifty-three weeks ended August 31, 2024, compared to the fifty-two weeks ended August 26, 2023. Interest expense is expected to increase in fiscal year 2025 as a result of the incremental borrowing to fund in part the OWYN Acquisition.
Operating expenses consist primarily of selling and marketing, general and administrative, and depreciation and amortization expense. The following is a brief description of the components of operating expenses: • Selling and marketing. Selling and marketing expenses comprise broker commissions, customer marketing, media and other marketing costs. • General and administrative.
Cost of goods sold includes products provided at no charge as part of promotions and the non-food materials provided with customer orders. Operating expenses. Operating expenses consist primarily of selling and marketing, general and administrative, depreciation and amortization, and business transaction costs. The following is a brief description of the components of operating expenses: • Selling and marketing.
This cash consumption offset income from operations, which increased by $2.1 million to $204.9 million for the fifty-two weeks ended August 26, 2023 as compared to $202.8 million for the fifty-two weeks ended August 27, 2022, primarily attributable to net sales growth in North America.
Income from operations increased by $1.5 million to $206.5 million for the fifty-three weeks ended August 31, 2024, as compared to $204.9 million for the fifty-two weeks ended August 26, 2023. Investing activities.
In addition, cash paid for taxes decreased $21.8 million to $27.4 million for the fifty-two weeks ended August 26, 2023 as compared to $49.2 million for the fifty-two weeks ended August 27, 2022. Investing activities.
Our net cash used in investing activities was $286.9 million for the fifty-three weeks ended August 31, 2024, compared to $12.2 million for the fifty-two weeks ended August 26, 2023.
During the fifty-two weeks ended August 27, 2022, we recognized a foreign currency translation gain of $1.1 million related to the liquidation of a foreign subsidiary. The remaining variance is attributable to changes in foreign currency rates related to our international operations. Income tax expense.
Gain (loss) on foreign currency transactions. Foreign currency transactions resulted in an immaterial gain and an immaterial loss for the fifty-three weeks ended August 31, 2024, and August 26, 2023, respectively. The variance is attributable to changes in foreign currency rates related to our international operations. Income tax expense.
The increase was primarily attributable to $2.4 million of fees related to the extension of the Term Loan (as defined below), $3.4 million of executive officer transition costs, and an increase of $2.8 million in stock-based compensation expense in the fifty-two weeks ended August 26, 2023.
The increase was primarily attributable to an increase of $7.8 million of employee-related costs, $3.9 million in stock-based compensation expense, $3.7 million related to the OWYN Acquisition, higher executive transition costs, and higher corporate expenses and other costs. • Depreciation and amortization .
During the fifty-two weeks ended August 26, 2023, we repurchased 546,346 shares of common stock for $16.4 million, averaging a purchase price per share of $30.11. During the fifty-two weeks ended August 27, 2022, we repurchased 1,720,520 shares of common stock for $59.9 million, averaging a purchase price per share of $34.79.
The Company did not repurchase any shares of common stock during the fifty-three weeks ended August 31, 2024. During the fifty-two weeks ended August 26, 2023, the Company repurchased 546,346 shares of common stock at an average share price of $30.11 per share.
Results of Operations During the fifty-two weeks ended August 26, 2023, our net sales increased $74.0 million, or 6.3%, to $1,242.7 million compared to net sales of $1,168.7 million for the fifty-two weeks ended August 27, 2022.
Results of Operations During the fifty-three weeks ended August 31, 2024, our net sales increased $88.6 million, or 7.1%, to $1,331.3 million compared to net sales of $1,242.7 million for the fifty-two weeks ended August 26, 2023, driven by Quest volume growth, an additional week of activity with fiscal year 2024 having 53 weeks, and the OWYN Acquisition, which more than offset continued softness in Atkins net sales.
“Risk Factors” for additional information regarding the risks of inflation, higher raw material, packaging, co-manufacturing, and logistics costs, and supply chain challenges.
“Risk Factors” for additional information regarding the risks of inflation, higher raw material, packaging, co-manufacturing, and logistics costs, and supply chain challenges. 37 Our Reportable Segment For the fifty-three weeks ended August 31, 2024, following the OWYN Acquisition, we determined our operations are organized into two operating segments, Quest and Atkins, and OWYN, due to similar financial, economic and operating characteristics.
Net sales consist primarily of product sales less the cost of promotional activities, slotting fees and other sales credits and adjustments, including product returns. Cost of goods sold. Cost of goods sold consists primarily of the costs we pay to our contract manufacturing partners to produce the products sold.
Previously, during the fifty-two weeks ended August 26, 2023, and August 27, 2022, we determined our operations were organized into one consolidated operating segment and reportable segment. Key Financial Definitions Net sales. Net sales consist primarily of product sales less the cost of promotional activities, slotting fees and other sales credits and adjustments, including product returns. Cost of goods sold.
Net cash used in financing activities for the fifty-two weeks ended August 26, 2023 primarily consisted of $121.5 million in principal payments on the Term Facility and $16.4 million in repurchases in common stock.
Net cash provided by financing activities for the fifty-three weeks ended August 31, 2024, primarily consisted of $250.0 million of proceeds from the 2024 Incremental Facility Amendment in conjunction with the OWYN Acquisition, partially offset by $135.0 million in principal payments on the Term Facility.
Stock Repurchase Program On October 21, 2022, we announced that our Board of Directors had 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.
Business transaction costs within the Consolidated Statements of Income and Comprehensive Income for the fifty-three weeks ended August 31, 2024, were $14.5 million, which included $5.7 million of transaction advisory fees, $3.4 million of non-deferrable third-party financing costs incurred in connection with the 2024 Incremental Facility Amendment to the Credit Agreement, and $5.4 million of legal, due diligence, accounting, and other costs. 43 Stock Repurchase Program On October 21, 2022, we announced that our Board of Directors had 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.
Interest expense increased $8.2 million for the fifty-two weeks ended August 26, 2023 compared to the fifty-two weeks ended August 27, 2022 primarily due to the increase in interest rates on our Term Facility (as defined below) to 7.9% as of August 26, 2023 from 6.2% as of August 27, 2022.
Interest expense decreased $4.0 million for the fifty-three weeks ended August 31, 2024, compared to the fifty-two weeks ended August 26, 2023, primarily due to the effect of principal prepayments reducing the outstanding balance of the Term Facility (defined below) during a majority of the fiscal year prior to the incremental borrowing made in June 2024.
The $8.2 million of net cash used in investing activities for the fifty-two weeks ended August 27, 2022 primarily comprised the $5.2 million purchases of property and equipment and the issuance of a $2.4 million note receivable. Financing activities.
The increase in cash used in investing activities was primarily due to the OWYN Acquisition of $280.4 million, net of cash acquired, as well as $5.7 million of purchases of property and equipment.
Adjusted EBITDA increased $11.5 million, or 4.9%, for the fifty-two weeks ended August 26, 2023 compared to the fifty-two weeks ended August 27, 2022, driven primarily by net sales growth due to the price increase effective in the fourth quarter of fiscal year 2022, partially offset by unfavorable raw material, packaging, and co-manufacturing costs and supply chain challenges in the fifty-two weeks ended August 26, 2023 as previously discussed.
Adjusted EBITDA increased $23.6 million, or 9.6%, for the fifty-three weeks ended August 31, 2024, compared to the fifty-two weeks ended August 26, 2023, driven primarily by higher gross profit, including contribution from the OWYN Acquisition, partially offset by investments in growth initiatives and higher advertising costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+2 added−4 removed2 unchanged
Biggest changeHowever, there can be no assurance that the price increases will fully offset the effects of higher raw material, packaging, supply and distribution costs on our results of operations and financial condition. Refer to Item 1A, Risk Factors, for additional discussion of our risks associated with the costs of our raw materials, our supply chain, and inflation. Interest rate risk.
Biggest changeRefer to Item 1A, Risk Factors, for additional discussion of our risks associated with the costs of our raw materials, our supply chain, and inflation. Interest rate risk. We are subject to interest rate risk in connection with borrowing based on a variable interest rate.
Based on the amount outstanding of the Term Facility at the end of fiscal year 2023, a 1% increase in interest rates would increase our annual interest expense by approximately $2.9 million. Foreign currency risk. We are exposed to changes in currency rates as a result of investments in foreign operations and revenue generated in currencies other than the U.S.
Based on the amount outstanding of the Term Facility at the end of fiscal year 2024, a 1% increase in interest rates would increase our annual interest expense by approximately $4.0 million. Foreign currency risk. We are exposed to changes in currency rates as a result of investments in foreign operations and revenue generated in currencies other than the U.S.
Interest rate changes do not affect the market value of such debt, but could affect the amount of our interest payments, and accordingly, our future earnings and cash flows, assuming other factors are held constant. As of August 26, 2023, the outstanding balance of the Term Facility was $285 million.
Interest rate changes do not affect the market value of such debt, but could affect the amount of our interest payments, and accordingly, our future earnings and cash flows, assuming other factors are held constant. As of August 31, 2024, the outstanding balance of the Term Facility was $400.0 million.
Dollar. Revenue and profit generated by international operations will increase or decrease compared to prior periods as a result of changes in foreign currency exchange rates. Historically, our foreign currency risk has primarily related to our operations in Canada, which were largely related to a brand we sold in September 2020.
Dollar. Revenue and profit generated by international operations will increase or decrease compared to prior periods as a result of changes in foreign currency exchange rates. Historically, our foreign currency risk has primarily related to our operations in Canada and Australia. 48
We are subject to interest rate risk in connection with borrowing based on a variable interest rate. Derivative financial instruments, such as interest rate swap agreements and interest rate cap agreements, may be used for the purpose of managing fluctuating interest rate exposures that exist from our variable rate debt obligations that are expected to remain outstanding.
Derivative financial instruments, such as interest rate swap agreements and interest rate cap agreements, while not currently used, may be used for the purpose of managing fluctuating interest rate exposures that exist from our variable rate debt obligations that are expected to remain outstanding.
Removed
During the fifty-two weeks ended August 26, 2023, our gross margins and profitability were negatively affected by higher raw material, packaging, freight and logistics costs, and supply chain challenges, including supply chain disruptions resulting from labor shortages as well as disruptions in ingredients, caused, in part, by the uncertain economic environment, and macroeconomic and geopolitical events and trends.
Added
While inflation may affect our revenue and cost of products, we believe the effects of inflation on our results of operations and financial condition have not been significant during the fifty-three weeks ended August 31, 2024, as compared to prior fiscal periods.
Removed
We expect these cost pressures and supply chain challenges to continue, but improve, during fiscal year 2024. In addition, current or future governmental policies may increase the risk of inflation, which could further increase the costs of ingredients, packaging and finished goods for our business.
Added
While the Company is monitoring key ingredient inflation, which may affect profitability, we believe the Company's strategy and positioning will continue to drive profitable growth for our product offerings and growth within the growing nutritional snacking category. However, there can be no assurance that results of operations and financial condition will not be materially impacted by inflation in the future.
Removed
As a result, we instituted price increases effective in the first and fourth quarters of fiscal year 2022. Management believes these price increases and additional cost savings initiatives will enable us to continue to invest in projects that drive growth.
Removed
With this sale transaction, as well as the restructuring-related business activities in Europe, we have mitigated some of our risk of exposure to changes in foreign currency rates. 45

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