Simply Good Foods Company
10/27/2026 | Press release | Distributed by Public on 10/27/2026 06:36
Annual Report for Fiscal Year Ending 08/29, 2026 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and related notes included in Item 8 of this Report. In addition to historical information, the following discussion contains forward-looking statements, including, but not limited to, statements regarding the Company's expectation for future performance, liquidity and capital resources that involve risks, uncertainties and assumptions that could cause actual results to differ materially from the Company's expectations. The Company's actual results may differ materially from those contained in or implied by any forward-looking statements. Factors that could cause such differences include those identified below and those described in "Cautionary Note Regarding Forward-Looking Statements," and in Item 1A "Risk Factors" of this Report. The Company assumes no obligation to update any of these forward-looking statements.
Our fiscal year ends the last Saturday in August. Our fiscal year 2026 ended August 29, 2026, was a fifty-two week period. Our fiscal years 2025 and 2024 ended August 30, 2025, and August 31, 2024, were a fifty-two week period and a fifty-three week period, respectively. 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). Our fiscal quarters for fiscal 2026 ended on November 29, 2025, February 28, 2026, May 30, 2026, and August 29, 2026.
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. In context, "Quest" may also refer to the Quest brand, "Atkins" may also refer to the Atkins brand, and "OWYN" may also refer to the OWYN brand. Atkins, Atkins Endulge, Quest, OWYN, and the Simply Good logo are either registered trademarks or trademarks of the Company's wholly owned subsidiary Simply Good Foods USA, Inc. or one of its affiliates in the United States and elsewhere. All rights are reserved.
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 that seek to address consumers' increasing demand for protein-rich food, that is low in simple carbohydrates. The product portfolio we develop, market and sell consists primarily of protein bars, ready-to-drink ("RTD") protein shakes, sweet and salty protein 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 and licensing opportunities.
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. We distribute our products in major retail channels, primarily in North America, including grocery, club, and mass merchandise, and through e-commerce, convenience, specialty, and other channels. Our portfolio of nutritious snacking brands gives us a strong platform with which to introduce new products, expand distribution, and attract new consumers to our products.
The Simply Good Foods Company ("Simply Good Foods") was formed in March 2017, to acquire NCP-ATK Holdings, Inc. ("Atkins"), which was completed in July 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 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".
Business Trends
During the fifty-two weeks ended August 29, 2026, our results of operations were primarily driven by declines for Atkins and OWYN, which were partially offset by Quest growth. For Atkins and OWYN, our results of operations were affected negatively by reduced household penetration leading to reduced velocities and continued distribution-related losses. In recent periods, retail distribution for the Atkins brand has been under pressure due to declining velocities. The Atkins brand has had, and continues to have, a large retail presence on-shelf, which was reduced in the current fiscal year and could be reduced in future periods. In response, we have been taking action to bolster the highest performing Atkins products and simultaneously working with retailers to replace lower performing Atkins products with higher performing products. In fiscal year 2026, OWYN's reduced household penetration contributed to softer velocities, including on newly expanded distribution, which has resulted in distribution-related declines in the current fiscal year, and which could continue in future periods.
In fiscal 2027, we will be launching new advertising campaigns across all three brands to potentially increase consumer demand and drive velocities. If we fail to implement our growth strategies or they ultimately prove to be unsuccessful, our sales and profitability may be negatively affected, which could materially and adversely affect our business, financial condition and results of operations.
The Company's gross margin was affected by the unfavorable effects of higher input costs and restructuring costs compared to the prior year, with productivity a modest offset. Margins are expected to remain under pressure and are dependent on the Company's ability to
realize incremental benefits from productivity and cost savings initiatives, our recently announced and implemented pricing actions and other mitigating actions. Economic pressures on customers and consumers, including the challenges of high inflation and consumer sensitivity to price increases, are expected to have corresponding elasticity impacts which may have adverse effects on net sales and profitability. We continue to monitor and evaluate macroeconomic trends including consumer purchasing behavior and sentiment, economic uncertainty, key ingredient inflation, supply chain challenges, and the effects of tariffs.
Ongoing geopolitical tensions could lead to significant disruption of global energy supplies and increases in global energy prices, adversely affect global supply chains, heighten inflationary pressures on our input costs and supply chain, and adversely affect consumer spending patterns. At this time, these factors have not resulted in a material negative effect on our business, financial condition and results of operations. However, we continue to evaluate the evolving macroeconomic environment as ongoing geopolitical tensions could adversely affect the Company for the aforementioned reasons.
Please also see the information under Item 1A. "Risk Factors" for additional information regarding the risks of inflation, higher raw material, packaging, co-manufacturing, and logistics costs, and supply chain challenges.
Goodwill and Intangible Assets
As a result of the sustained decline in the Company's stock price and declines in the Company's market capitalization assessed during the third quarter of fiscal year 2026, the Company identified a triggering event indicating that it was more likely than not that the fair value of the goodwill reporting unit was less than its carrying amount. The Company conducted a quantitative interim goodwill assessment as of the last day of its third quarter, utilizing a weighted combination of the discounted cash flow method under the income approach and the guideline public company method under the market approach to estimate the fair value of the equity of the Company. Based on testing, the carrying value was greater than its fair value, resulting in an impairment of $38.0 million related to goodwill for the fifty-two weeks ended August 29, 2026.
As a result of the declines of net sales and future revenue projections assessed during the second quarter of fiscal year 2026, the Company identified a triggering event indicating that it was more likely than not that the fair value of both the OWYN and Atkins brands and trademarks indefinite-lived intangible assets were less than their respective carrying amounts. The Company conducted a quantitative assessment as of the last day of its second quarter, utilizing the relief from royalty methodology under the income approach to estimate the fair value of the intangible assets. Based on testing, the respective assets' carrying values exceeded their fair values, resulting in a loss on impairment for OWYN and for Atkins.
As a result of the sustained decline in the Company's stock price and declines in the Company's market capitalization assessed during the third quarter of fiscal year 2026, the Company identified a triggering event indicating that it was more likely than not that the fair value of both the OWYN and Atkins brands and trademarks indefinite-lived intangible assets were less than their respective carrying amounts. The Company conducted a quantitative assessment as of the last day of its third quarter, utilizing the relief from royalty methodology under the income approach to estimate the fair value of the intangible assets. Based on testing, the respective assets' carrying values exceeded their fair values, resulting in a loss on impairment for OWYN and for Atkins. In addition, the Company included the Quest brand and trademark indefinite-lived intangible asset within the quantitative assessment, utilizing the relief from royalty methodology under the income approach to estimate the fair value of the intangible asset. Based on testing, Quest's fair value exceeded its carrying value, resulting in no impairment.
During the fifty-two weeks ended August 29, 2026, the Company recorded a loss on impairment of $200.0 million and $93.0 million for the OWYN and Atkins brand indefinite-lived intangible assets, respectively. During the fifty-two weeks ended August 30, 2025, the Company recorded a loss on impairment of $60.9 million for the Atkins brand indefinite-lived intangible asset and the licensing agreements finite-lived intangible asset.
The Company performed its annual qualitative impairment assessment of goodwill and its indefinite-lived and finite-lived intangible assets as of the first day of the fourth quarter of fiscal year 2026, which did not identify any incremental indicators of impairment from its previously performed quantitative assessment as of the last day of its third quarter. It was determined that it was more likely than not that goodwill and each indefinite-lived intangible asset had fair values in excess of or equal to their carrying values and its finite-lived intangible assets did not indicate that their carrying amounts may not be recoverable.
We believe the estimates and assumptions utilized in our impairment assessments are reasonable and are comparable to those that would be used by other marketplace participants. However, actual events and results could differ substantially from those utilized in our valuations. Significant declines of future revenue projections or changes of other assumptions used in estimating fair values versus those utilized at the time of the initial valuations could result in further impairment charges that could materially affect the consolidated financial statements. Refer to Note 5, Goodwill and Intangibles, for additional information regarding the Company's reporting units and impairment assessments.
Restructuring and Other
For the fifty-two weeks ended August 29, 2026, the Company incurred $19.5 million of costs for restructuring activities, of which $5.7 million have been included within Cost of goods sold, $1.1 million have been included within Selling and marketing, and $12.7 million have been included within General and administrative, which includes $2.6 million of impairment charges related to various assets utilized at our contract manufacturing facilities for which their carrying values were greater than their fair values, in the Consolidated Statements of Income and Comprehensive Income (Loss). Refer to Note 16, Restructuring and Other, for additional information regarding restructuring and other activities.
During the second quarter of fiscal year 2026, the Company announced certain restructuring activities in conjunction with the implementation of the Company's modified organization design and actions to streamline its operations, which will create a more efficient organization that will continue to support and build its business. These restructuring plans primarily included workforce reductions, changes in management structure, actions to streamline its operations and other cost savings initiatives. As of August 29, 2026, the Company expects to incur approximately $25.0 million, including the $19.5 million referenced above, in restructuring and other costs, which were paid throughout fiscal 2026 and will continue to be paid throughout fiscal 2027.
In connection with the restructuring activities, the Company recorded incremental stock-based compensation expense of $1.0 million in the second quarter of fiscal year 2026 related to the separation of the Company's prior President and Chief Executive Officer in January 2026. Refer to Note 14, Incentive Plan, for additional information.
Our Reportable Segment
As of August 29, 2026, the Company determined its operations are organized into one consolidated operating segment and reportable segment, represented by the Company's consolidated financial statements. Previously, as of August 30, 2025, the Company's operations were organized into two operating segments, Quest and Atkins, and OWYN, which were aggregated into one reportable segment due to similar financial, economic and operating characteristics.
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. 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. 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, business transaction costs, and loss on impairment. The following is a brief description of the components of operating expenses:
•Selling and marketing. Selling and marketing expenses comprise broker commissions, consumer 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, integration expense, restructuring costs, insurance and other general corporate expenses.
•Depreciation and amortization. Depreciation and amortization expenses consist of expenses associated with the depreciation of fixed assets and capitalized leasehold improvements and amortization of intangible assets.
•Business transaction costs. Business transaction costs are comprised of transaction advisory fees, non-deferrable debt issuance costs, legal, due diligence, consulting, and accounting expenses associated with the OWYN Acquisition.
•Loss on impairment. Loss on impairment is comprised of impairment charges related to our brand and trademarks indefinite-lived intangible asset and our licensing agreements finite-lived intangible asset.
Results of Operations
During the fifty-two weeks ended August 29, 2026, our net sales decreased 6.5% to $1,356.5 million compared to $1,450.9 million for the fifty-two weeks ended August 30, 2025, driven by continued velocity-related declines driving distribution-related declines for Atkins and OWYN, which were partially offset by Quest volume-driven growth.
Gross profit decreased and gross profit margin decreased 360 basis points, primarily as a result of higher input costs and current period restructuring costs compared to the prior period. We expect to continue building on our existing capabilities and strengthening the position of our brands in the marketplace, and will continue to invest in our business and improve our operating efficiencies.
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. 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 29, 2026, compared to the fifty-two weeks ended August 30, 2025, is presented below. A discussion regarding our financial condition and results of operations for the fifty-two weeks ended August 30, 2025, compared to the fifty-three weeks ended August 31, 2024, can be found under Item 7 of our Annual Report on Form 10-K for the fiscal year ended August 30, 2025, filed with the SEC on October 28, 2025.
Comparison of Results for the Fifty-Two Weeks Ended August 29, 2026, and the Fifty-two weeks ended August 30, 2025
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 29, 2026 | August 30, 2025 | ||||||||||||||||||||||||
| Net sales | $ | 1,356,499 | 100.0 | % | $ | 1,450,920 | 100.0 | % | ||||||||||||||||||
| Cost of goods sold | 914,136 | 67.4 | % | 925,173 | 63.8 | % | ||||||||||||||||||||
| Gross profit | 442,363 | 32.6 | % | 525,747 | 36.2 | % | ||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Selling and marketing | 129,446 | 9.5 | % | 134,282 | 9.3 | % | ||||||||||||||||||||
| General and administrative | 143,901 | 10.6 | % | 155,930 | 10.7 | % | ||||||||||||||||||||
| Depreciation and amortization | 17,731 | 1.3 | % | 16,900 | 1.2 | % | ||||||||||||||||||||
| Business transaction costs | - | - | % | 820 | 0.1 | % | ||||||||||||||||||||
| Loss on impairment | 331,000 | 24.4 | % | 60,928 | 4.2 | % | ||||||||||||||||||||
| Total operating expenses | 622,078 | 45.9 | % | 368,860 | 25.4 | % | ||||||||||||||||||||
| (Loss) income from operations | (179,715) | (13.2) | % | 156,887 | 10.8 | % | ||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||
| Interest income | 2,940 | 0.2 | % | 2,663 | 0.2 | % | ||||||||||||||||||||
| Interest expense | (21,447) | (1.6) | % | (23,249) | (1.6) | % | ||||||||||||||||||||
| (Loss) gain on foreign currency transactions | (65) | - | % | (421) | - | % | ||||||||||||||||||||
| Other income | 164 | - | % | 23 | - | % | ||||||||||||||||||||
| Total other income (expense) | (18,408) | (1.4) | % | (20,984) | (1.4) | % | ||||||||||||||||||||
| Income before income taxes | (198,123) | (14.6) | % | 135,903 | 9.4 | % | ||||||||||||||||||||
| Income tax (benefit) expense | (42,220) | (3.1) | % | 32,289 | 2.2 | % | ||||||||||||||||||||
| Net income | $ | (155,903) | (11.5) | % | $ | 103,614 | 7.1 | % | ||||||||||||||||||
| Other financial data: | ||||||||||||||||||||||||||
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Adjusted EBITDA (1)
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$ | 225,869 | 16.7 | % | $ | 278,162 | 19.2 | % | ||||||||||||||||||
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(1) Adjusted EBITDA is a non-GAAP financial metric. See below for a reconciliation of net income to EBITDA and Adjusted EBITDA for each applicable period.
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Net sales. Net sales were $1,356.5 million for the fifty-two weeks ended August 29, 2026, compared to $1,450.9 million for the fifty-two weeks ended August 30, 2025, representing a decrease of $94.4 million, or 6.5%, driven by continued velocity-related declines driving distribution-related declines for Atkins and OWYN, which were partially offset by Quest volume-driven growth.
Cost of goods sold. Cost of goods sold decreased $11.0 million, or 1.2%, for the fifty-two weeks ended August 29, 2026, compared to the fifty-two weeks ended August 30, 2025. The cost of goods sold decrease was primarily driven by the decrease of net sales compared to the prior year period and partially offset by higher input costs and restructuring costs compared to the prior year period.
Gross profit. Gross profit decreased $83.4 million, or 15.9%, to $442.4 million for the fifty-two weeks ended August 29, 2026, compared to the fifty-two weeks ended August 30, 2025. Gross profit margin was 32.6% of net sales for the fifty-two weeks ended August 29, 2026, a decrease of 360 basis points from 36.2% of net sales for the fifty-two weeks ended August 30, 2025. The decrease in gross profit margin was primarily driven by higher input costs and restructuring costs compared to the prior year period.
Operating expenses. Operating expenses increased $253.2 million, or 68.6%, for the fifty-two weeks ended August 29, 2026, compared to the fifty-two weeks ended August 30, 2025, due to the following:
•Selling and marketing. Selling and marketing expenses decreased $4.8 million, or 3.6%, for the fifty-two weeks ended August 29, 2026, compared to the fifty-two weeks ended August 30, 2025. The decrease was primarily related to a planned decrease in Atkins marketing spend partially offset by increases for Quest and OWYN.
•General and administrative. General and administrative expenses decreased $12.0 million, or 7.7%, for the fifty-two weeks ended August 29, 2026, compared to the fifty-two weeks ended August 30, 2025. The decrease was primarily attributable to a decrease of $16.4 million in integration expenses related to the OWYN Acquisition, a decrease of $7.5 million in employee-related costs, and lower general corporate expenses, partially offset by an increase of $12.7 million in restructuring costs and an increase of $2.3 million in term loan transaction fees.
•Depreciation and amortization. Depreciation and amortization expense was $17.7 million and $16.9 million for the fifty-two weeks ended August 29, 2026, compared to the fifty-two weeks ended August 30, 2025, respectively.
•Business transaction costs. Business transaction costs were zero for the fifty-two weeks ended August 29, 2026, compared to $0.8 million for the fifty-two weeks ended August 30, 2025.
•Loss on impairment. Loss on impairment charges were $331.0 million for the fifty-two weeks ended August 29, 2026 and $60.9 million for the fifty-two weeks ended August 30, 2025. Refer to Note 5, Goodwill and Intangibles, for additional information regarding the Company's impairment assessments.
Interest income. Interest income of $2.9 million increased $0.3 million for the fifty-two weeks ended August 29, 2026, compared to the fifty-two weeks ended August 30, 2025, primarily due to higher cash balances.
Interest expense. Interest expense of $21.4 million decreased $1.8 million for the fifty-two weeks ended August 29, 2026, compared to the fifty-two weeks ended August 30, 2025, primarily due to the decrease in interest rates on our Term Facility to 5.8% as of August 29, 2026 from 6.3% as of August 30, 2025.
(Loss) gain on foreign currency transactions. Foreign currency transactions resulted in a $0.1 million loss and a $0.4 million loss for the fifty-two weeks ended August 29, 2026, and August 30, 2025, respectively.
Income tax (benefit) expense. Income tax benefit was $42.2 million for the fifty-two weeks ended August 29, 2026, compared to income tax expense of $32.3 million for the fifty-two weeks ended August 30, 2025. The change in our income tax (benefit) expense was primarily driven by lower income from operations, primarily the loss on impairment.
Net (loss) income. Net loss was $155.9 million for the fifty-two weeks ended August 29, 2026, a decrease of $259.5 million, compared to net income of $103.6 million for the fifty-two weeks ended August 30, 2025. The decrease was driven by higher operating expenses, primarily the loss on impairment, and was partially offset by lower income tax (benefit) expense and other expense.
Adjusted EBITDA. Adjusted EBITDA decreased $52.3 million, or 18.8%, for the fifty-two weeks ended August 29, 2026, compared to the fifty-two weeks ended August 30, 2025, driven primarily by lower gross profit. For a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, see "Reconciliation of EBITDA and Adjusted EBITDA" below.
Reconciliation of EBITDA and Adjusted EBITDA
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). 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: loss on impairment, stock-based compensation expense, business transaction costs, purchase price accounting inventory step-up, integration expense, term loan transaction fees, restructuring and other costs, and other non-core expenses. The Company believes that EBITDA and Adjusted EBITDA, when used in conjunction with net income, are useful to provide additional information to investors. 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. 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. EBITDA and Adjusted EBITDA may not be comparable to other similarly titled captions of other companies due to differences in the non-GAAP calculation.
The following unaudited table provides a reconciliation of EBITDA and Adjusted EBITDA to their most directly comparable GAAP measure, which is net income, for the fifty-two weeks ended August 29, 2026, and fifty-two weeks ended August 30, 2025:
| 52-Weeks Ended | 52-Weeks Ended | |||||||||||||
| (In thousands) | August 29, 2026 | August 30, 2025 | ||||||||||||
| Net income | $ | (155,903) | $ | 103,614 | ||||||||||
| Interest income | (2,940) | (2,663) | ||||||||||||
| Interest expense | 21,447 | 23,249 | ||||||||||||
| Income tax (benefit) expense | (42,220) | 32,289 | ||||||||||||
| Depreciation and amortization | 24,255 | 21,431 | ||||||||||||
| EBITDA | (155,361) | 177,920 | ||||||||||||
| Loss on impairment | 331,000 | 60,928 | ||||||||||||
| Stock-based compensation expense | 17,280 | 15,273 | ||||||||||||
| Business transaction costs | - | 820 | ||||||||||||
| Inventory step-up | - | 1,412 | ||||||||||||
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Integration expense (1)
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10,621 | 20,856 | ||||||||||||
| Term loan transaction fees | 3,030 | 715 | ||||||||||||
| Restructuring and other costs | 19,492 | - | ||||||||||||
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Other (2)
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(193) | 238 | ||||||||||||
| Adjusted EBITDA | $ | 225,869 | $ | 278,162 | ||||||||||
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(1) Includes one-time effects from actions taken to mitigate OWYN product quality issues.
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(2) Other items consist principally of exchange impact of foreign currency transactions and other expenses.
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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). Our principal uses of cash have been working capital, debt service, repurchases of our common stock, and acquisition opportunities.
We had $138.4 million in cash as of August 29, 2026. We believe our sources of liquidity and capital will be sufficient to finance our continued operations, growth strategy and additional expenses we expect to incur for at least the next twelve months. As circumstances warrant, we may issue debt and/or equity securities from time to time on an opportunistic basis, dependent upon market conditions and available pricing. We make no assurance that we can issue and sell such securities on acceptable terms or at all.
Our material future cash requirements from contractual and other obligations relate primarily to our principal and interest payments for our Term Facility, as defined and discussed below, and our operating leases. 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.
Debt and Credit Facilities
On July 7, 2017, the Company (through certain of its subsidiaries) entered into a credit agreement with Barclays Bank PLC and other parties (as amended to date, the "Credit Agreement"). The Credit Agreement at that time provided for (i) a term facility of $200.0 million ("Term Facility") with a seven-year maturity and (ii) a revolving credit facility of up to $75.0 million (the "Revolving Credit Facility") with a five-year maturity. Substantially concurrent with the consummation of the business combination which formed the Company between Conyers Park Acquisition Corp. and NCP-ATK Holdings, Inc. on July 7, 2017, the full $200.0 million of the Term Facility (the "Term Loan") was drawn.
On November 7, 2019, we entered into a second amendment (the "Incremental Facility Amendment") to the Credit Agreement to increase the principal borrowed on the Term Facility by $460.0 million. The Term Facility together with the incremental borrowing make up the Initial Term Loans (as defined in the Incremental Facility Amendment). The Incremental Facility Amendment was executed to partially finance the acquisition of Quest Nutrition, LLC on November 7, 2019. No amounts under the Term Facility were repaid as a result of the execution of the Incremental Facility Amendment.
Effective as of December 16, 2021, we entered into a third amendment (the "Extension Amendment") to the Credit Agreement. The Extension Amendment provided for an extension of the stated maturity date of the Revolving Commitments and Revolving Loans (each as defined in the Credit Agreement) from July 7, 2022, to the earlier of (i) 91 days prior to the then-effective maturity date of the Initial Term Loans and (ii) December 16, 2026.
On January 21, 2022, we entered into the "2022 Repricing Amendment" to the Credit Agreement. The 2022 Repricing Amendment, among other things, (i) reduced the interest rate per annum applicable to the Initial Term Loans outstanding under the Credit Agreement immediately prior to the effective date of the 2022 Repricing Amendment, (ii) reset the prepayment premium for the existing Initial Term Loans to apply to Repricing Transactions (as defined in the Credit Agreement) that occur within six months after the effective date of the 2022 Repricing Amendment, and (iii) implemented SOFR and related replacement provisions for LIBOR.
On April 25, 2023, the Company entered into the "2023 Repricing Amendment" to the Credit Agreement. The 2023 Repricing Amendment, (i) reduced the interest rate per annum applicable to the Initial Term Loans outstanding under the Credit Agreement immediately prior to April 25, 2023, and (ii) provided for an extension of the maturity date of the Initial Term Loans from July 7, 2024, to March 17, 2027.
On June 13, 2024, the Company entered into a sixth amendment (the "2024 Incremental Facility Amendment") to the Credit Agreement to increase the principal borrowed on the Term Facility by $250.0 million. The terms of the incremental borrowing are the same as the terms of the outstanding borrowings under the Term Facility. The 2024 Incremental Facility Amendment was executed to partially finance the OWYN Acquisition. No amounts under the Term Facility were repaid as a result of the execution of the 2024 Incremental Facility Amendment.
On January 31, 2025, the Company entered into a seventh amendment (the "2025 Repricing Amendment") to the Credit Agreement to reduce the interest rate per annum applicable to the Initial Term Loans outstanding under the Credit Agreement immediately prior to the effective date of the 2025 Repricing Amendment.
On November 19, 2025, the Company entered into an eighth amendment (the "2026 Incremental Facility Amendment") to the Credit Agreement to increase the principal borrowed on the Term Facility by $150.0 million and provided for an extension of the maturity date from March 17, 2027, to March 17, 2030. The 2026 Incremental Facility Amendment also provided for an extension of the stated maturity date of the
Revolving Commitments and Revolving Loans (each as defined in the Credit Agreement) from December 16, 2026, to the earlier of (i) 91 days prior to the then-effective maturity date of the Term Facility and (ii) December 16, 2029. The terms of the incremental borrowing are substantially the same as the terms of the outstanding borrowings under the Term Facility. No amounts of the Term Facility were repaid as a result of the execution of the 2026 Incremental Facility Amendment.
Effective as of the 2026 Incremental Facility Amendment, the interest rate per annum for the Initial Term Loans is based on either:
i.A base rate equaling the higher of (a) the "prime rate," (b) the federal funds effective rate plus 0.50%, or (c) the Adjusted Term SOFR Rate (as defined in the Credit Agreement) applicable for an interest period of one month plus 1.00% plus (x) 1.00% margin for the Term Loan or (y) 1.00% margin for the Revolving Credit Facility; or
ii.SOFR, subject to a floor of 0.00%, plus (x) 2.00% margin for the Term Loan or (y) 2.00% margin for the Revolving Credit Facility.
In connection with the closing of the 2026 Incremental Facility Amendment, the Company expensed $2.7 million of non-deferrable third-party costs through General and administrative within the Consolidated Statements of Income and Comprehensive Income (Loss) and capitalized $2.6 million of upfront lender fees (original issue discount) and third-party financing costs.
The Simply Good Foods Company is not a borrower under the Credit Agreement and has not provided a guarantee of the Credit Agreement. Simply Good Foods USA, Inc., is the administrative borrower and certain other subsidiary holding companies are co-borrowers under the Credit Agreement. Each of our domestic subsidiaries that is not a named borrower under the Credit Agreement has provided a guarantee on a secured basis. As security for the payment or performance of the debt under the Credit Agreement, the borrowers and the guarantors have pledged certain equity interests in their respective subsidiaries and granted the lenders a security interest in substantially all of their domestic assets. All guarantors other than Quest Nutrition, LLC and Only What You Need, Inc. are holding companies with no assets other than their investments in their respective subsidiaries.
The Credit Agreement contains certain financial and other covenants that limit our ability to, among other things, incur and/or undertake asset sales and other dispositions, liens, indebtedness, certain acquisitions and investments, consolidations, mergers, reorganizations and other fundamental changes, payment of dividends and other distributions to equity and warrant holders, and prepayments of material subordinated debt, in each case, subject to customary exceptions materially consistent with credit facilities of such type and size. The Revolving Credit Facility has a maximum total net leverage ratio equal to or less than 6.00:1.00 contingent on credit extensions in excess of 30% of the total amount of commitments available under the Revolving Credit Facility. Any failure to comply with the restrictions of the credit facilities may result in an event of default. We were in compliance with all financial covenants as of August 29, 2026, and August 30, 2025, respectively.
As of August 29, 2026, the outstanding balance of the Term Facility was $350.0 million. We are not required to make principal payments on the Term Facility over the twelve months following the period ended August 29, 2026. The outstanding balance of the Term Facility is due upon its maturity in March 2030. As of August 29, 2026, there were no amounts drawn against the Revolving Credit Facility.
Stock Repurchase Program
The Company adopted a stock repurchase program in November 2018. On January 6, 2026, the Company announced that its Board of Directors approved a $200.0 million increase in its repurchase authorization under its stock repurchase program (the "Current Authorization"). Under the stock repurchase program, the Company may repurchase shares from time to time in the open market or in privately negotiated transactions. The stock repurchase program does not obligate the Company to acquire any specific number of shares or acquire shares over any specific period of time. The stock repurchase program may be suspended or discontinued at any time by the Company and does not have an expiration date.
During the fifty-two weeks ended August 29, 2026, the Company repurchased 11,662,234 shares of common stock at an average share price of $18.29 per share, inclusive of commissions and exclusive of accrued excise tax. During the fifty-two weeks ended August 30, 2025, the Company repurchased 1,592,471 shares of common stock at an average share price of $31.95 per share, inclusive of commissions and exclusive of accrued excise tax. The Company did not repurchase any shares of common stock during the fifty-three weeks ended August 31, 2024. The U.S. Inflation Reduction Act of 2022 requires a 1% excise tax on the net amount of share repurchases. As of August 29, 2026, approximately $157.4 million remained available under the Current Authorization.
Cash Flows
The following table sets forth the major sources and uses of cash for the fifty-two weeks ended August 29, 2026, and the fifty-two weeks ended August 30, 2025. A discussion regarding the major sources and uses of cash for the fifty-three weeks ended August 31, 2024, can be found under Item 7 of our Annual Report on Form 10-K for the fiscal year ended August 30, 2025, filed with the SEC on October 28, 2025.
| 52-Weeks Ended | 52-Weeks Ended | |||||||||||||
|
(In thousands)
|
August 29, 2026 | August 30, 2025 | ||||||||||||
|
Net cash provided by operating activities
|
$ | 181,049 | $ | 178,457 | ||||||||||
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Net cash used in investing activities
|
$ | (24,102) | $ | (20,932) | ||||||||||
| Net cash used in financing activities | $ | (117,186) | $ | (191,205) | ||||||||||
Operating activities. Our net cash provided by operating activities increased $2.6 million to $181.0 million for the fifty-two weeks ended August 29, 2026, compared to $178.5 million for the fifty-two weeks ended August 30, 2025. The increase in cash provided by operating activities was primarily attributable to changes in working capital, comprised of changes in accounts receivable, net, inventories, net, prepaid expenses, other current assets, accounts payable, accrued interest, accrued expenses and other current liabilities, and other assets and liabilities, which are driven by the timing of payments and receipts and decreases of inventory balances. Changes in working capital provided cash of $5.3 million in the fifty-two weeks ended August 29, 2026, compared to $32.9 million of cash consumed in the fifty-two weeks ended August 30, 2025, a difference of $38.2 million. Loss from operations was $179.7 million for the fifty-two weeks ended August 29, 2026, as compared to income from operations of $156.9 million for the fifty-two weeks ended August 30, 2025. The decrease was driven by higher operating expenses, primarily the loss on impairment.
Investing activities. Our net cash used in investing activities was $24.1 million for the fifty-two weeks ended August 29, 2026, compared to $20.9 million for the fifty-two weeks ended August 30, 2025. Our net cash used in investing activities for the fifty-two weeks ended August 29, 2026, was primarily comprised of $24.1 million of purchases of property and equipment, primarily at our contract manufacturing facilities. The $20.9 million of net cash used in investing activities for the fifty-two weeks ended August 30, 2025, was primarily comprised of $20.5 million of purchases of property and equipment, primarily at our contract manufacturing facilities.
Financing activities. Our net cash used in financing activities was $117.2 million for the fifty-two weeks ended August 29, 2026, compared to the net cash used in financing activities of $191.2 million for the fifty-two weeks ended August 30, 2025. Net cash used in financing activities for the fifty-two weeks ended August 29, 2026, primarily consisted of $213.3 million in repurchases of common stock, inclusive of commissions and exclusive of accrued excise tax, and $50.0 million in principal payments on the Term Facility, partially offset by $150.0 million in proceeds from issuance of long-term debt and $1.1 million of cash proceeds received from option exercises. Net cash used in financing activities for the fifty-two weeks ended August 30, 2025, primarily consisted of $150.0 million in principal prepayments on the Term Facility, and $50.9 million in repurchases of common stock, inclusive of commissions and exclusive of accrued excise tax, partially offset by $12.9 million of cash proceeds received from option exercises.
Critical Accounting Policies, Judgments and Estimates
General
Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. While the majority of our revenue, expenses, assets and liabilities are not based on estimates, there are certain accounting principles that require management to make estimates regarding matters that are uncertain and susceptible to change. Critical accounting policies are defined as those policies that are reflective of significant judgments, estimates and uncertainties, which could potentially result in materially different results under different assumptions and conditions. Management regularly reviews the estimates and assumptions used in the preparation of the financial statements for reasonableness and adequacy. 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 our financial condition and results of operations and that require significant, difficult, subjective or complex judgments. Other companies in similar businesses may use different estimation policies and methodologies, which may affect the comparability of our financial condition, results of operations and cash flows to those of other companies.
Revenue Recognition
We recognize revenue when performance obligations under the terms of a contract with our customer are satisfied. We have determined that fulfilling and delivering products is a single performance obligation. Revenue is recognized at the point in time when we have satisfied our performance obligation and the customer has obtained control of the products. This generally occurs when the product is delivered to or picked up by our customer based on applicable shipping terms, which is typically within 30 days.
Revenue is measured as the amount of consideration expected to be received in exchange for fulfilled product orders, including estimates of variable consideration. The most common forms of variable consideration include trade promotions, such as consumer incentives, coupon redemptions and other marketing activities, allowances for unsaleable product, and any additional amounts where a distinct good or service cannot be identified or the value cannot be reasonably estimated. Estimates of variable consideration are made using various information including historical data on performance of similar trade promotional activities, market data from Circana, and our best estimate of current activity. 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. 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. As a result, we do not have any material significant payment 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. Trade promotions are recorded as a reduction to net sales with a corresponding reduction to accounts receivable at the time of revenue recognition for the underlying sale. The recognition of trade promotions requires management to make estimates regarding the volume of incentive that will be redeemed and their total cost. These estimates are made using various information including historical data on the performance of similar trade promotional activities, market data from Circana, 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.
As of August 29, 2026, and August 30, 2025, the allowance for trade promotions was $40.2 million and $37.8 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.
Goodwill and 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. We perform our goodwill impairment assessment for each reporting unit that has goodwill. The process of evaluating goodwill and indefinite-lived intangibles for impairment is subjective and requires significant judgment at many points during the analysis.
As of August 29, 2026, the Company determined its operations are organized into one consolidated operating segment and reportable segment, represented by the Company's consolidated financial statements. Previously, as of August 30, 2025, the Company's operations were organized into two operating segments, Quest and Atkins, and OWYN, which were aggregated into one reportable segment due to similar financial, economic and operating characteristics.
We assess goodwill and indefinite-lived intangible assets using either a qualitative or quantitative approach to determine whether it is more likely than not that the fair values of the reporting units or indefinite-lived intangible assets are less than their carrying amounts. The qualitative assessment evaluates factors including macro-economic conditions, industry-specific and company-specific considerations, legal and regulatory environments, and historical performance. If we determine that it is more likely than not that the fair value of a reporting unit or an indefinite-lived intangible asset is less than its carrying value, a quantitative assessment is performed. Otherwise, no further assessment is required. The quantitative approach compares the estimated fair value of the reporting unit, including goodwill, or the indefinite-lived intangible asset to its carrying amount. The material inputs and assumptions underlying the quantitative assessments of goodwill and intangible impairment are based on operational forecasts derived from expectations of future operating performance, which requires considerable management judgment regarding matters that are uncertain and susceptible to change. Determining the estimated fair value requires multiple Level 3 inputs based on data available at the time of the quantitative assessment including, but not limited to, future revenue projections, discount rates, and royalty rates. 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.
As a result of the sustained decline in the Company's stock price and declines in the Company's market capitalization assessed during the third quarter of fiscal year 2026, the Company identified a triggering event indicating that it was more likely than not that the fair value of the goodwill reporting unit was less than its carrying amount. The Company conducted a quantitative interim goodwill assessment as of the last day of its third quarter, utilizing a weighted combination of the discounted cash flow method under the income approach and the guideline public company method under the market approach to estimate the fair value of the equity of the Company. Based on testing, the carrying value
was greater than its fair value, resulting in an impairment of $38.0 million related to goodwill for the fifty-two weeks ended August 29, 2026.
As a result of the declines of net sales and future revenue projections assessed during the second quarter of fiscal year 2026, the Company identified a triggering event indicating that it was more likely than not that the fair value of both the OWYN and Atkins brands and trademarks indefinite-lived intangible assets were less than their respective carrying amounts. The Company conducted a quantitative assessment as of the last day of its second quarter, utilizing the relief from royalty methodology under the income approach to estimate the fair value of the intangible assets. Based on testing, the respective assets' carrying values exceeded their fair values, resulting in a loss on impairment for OWYN and for Atkins.
As a result of the sustained decline in the Company's stock price and declines in the Company's market capitalization assessed during the third quarter of fiscal year 2026, the Company identified a triggering event indicating that it was more likely than not that the fair value of both the OWYN and Atkins brands and trademarks indefinite-lived intangible assets were less than their respective carrying amounts. The Company conducted a quantitative assessment as of the last day of its third quarter, utilizing the relief from royalty methodology under the income approach to estimate the fair value of the intangible assets. Based on testing, the respective assets' carrying values exceeded their fair values, resulting in a loss on impairment for OWYN and for Atkins. In addition, the Company included the Quest brand and trademark indefinite-lived intangible asset within the quantitative assessment, utilizing the relief from royalty methodology under the income approach to estimate the fair value of the intangible asset. Based on testing, Quest's fair value exceeded its carrying value, resulting in no impairment.
During the fifty-two weeks ended August 29, 2026, the Company recorded a loss on impairment of $200.0 million and $93.0 million for the OWYN and Atkins brand indefinite-lived intangible assets, respectively. During the fifty-two weeks ended August 30, 2025, the Company recorded a loss on impairment of $60.9 million for the Atkins brand indefinite-lived intangible asset and the licensing agreements finite-lived intangible asset.
The Company performed its annual qualitative impairment assessment of goodwill and its indefinite-lived intangible assets as of the first day of the fourth quarter of fiscal year 2026, which did not identify any incremental indicators of impairment from its previously performed quantitative assessment as of the last day of its third quarter. It was determined that it was more likely than not that goodwill and each indefinite-lived intangible asset had fair values in excess of or equal to their carrying values and its finite-lived intangible assets did not indicate that their carrying amounts may not be recoverable. The qualitative assessments performed as of the first day of the fourth quarter of fiscal years 2025 and 2024 did not identify indicators of impairment based on the information available at that time, and it was determined that it was more likely than not that goodwill and each reporting unit and indefinite-lived intangible had fair values in excess of their carrying values.
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. Finite-lived intangible assets are tested for impairment when events or circumstances indicated that the carrying amount may not be recoverable.
For the fifty-two weeks ended August 29, 2026, 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-two weeks ended August 30, 2025, we identified indicators of impairment related to our licensing agreements finite-lived intangible asset. Accordingly, the Company proceeded to conduct a quantitative impairment assessment. Based on our quantitative assessment, the asset had an excess carrying value over its respective fair value, resulting in a loss on impairment. For the fifty-three weeks ended August 31, 2024, 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.
We believe the estimates and assumptions utilized in our impairment assessment are reasonable and are comparable to those that would be used by other marketplace participants. However, actual events and results could differ substantially from those utilized in our valuations. Significant declines of future revenue projections or changes of other assumptions used in estimating fair values versus those utilized at the time of the initial valuations could result in further impairment charges that could materially affect the consolidated financial statements.
Income Taxes
We are subject to income taxes in the United States and numerous other jurisdictions. Significant judgment is required in determining our provision for income tax, including evaluating uncertainties in the application of accounting principles and complex tax laws.
Income taxes include federal, state and foreign taxes currently payable and deferred taxes arising from temporary differences between income for financial reporting and income tax purposes. Deferred tax assets and liabilities are determined based on the differences between the financial statement balances and the tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to amounts expected to be realized. Significant management judgment is required in determining the effective tax rate, evaluating tax positions and determining the net realizable value of deferred tax assets.
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.
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