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The Simply Good Foods Company Reports First Quarter 2018 Financial Results
Denver, CO, January 9, 2018 - The Simply Good Foods Company (NASDAQ: SMPL, SMPL.W) (“Simply Good Foods,” or the “Company”), a developer, marketer and seller of branded nutritional foods and snacking products, today reported financial results for the 13 week first quarter ended November 25, 2017.
“We are off to a solid start for fiscal year 2018 as we benefited from increased sales volume and gross margin expansion resulting in solid profit growth,” commented Joseph E. Scalzo, President and Chief Executive Officer of Simply Good Foods. “We are particularly pleased with our strong retail performance for the thirteen weeks ended November 25, 2017, which grew 5.5% in the U.S. despite a very difficult comparison in the same period a year ago. We remain confident in our business growth opportunities moving forward and our ability to execute against our four strategic growth initiatives to create value for our shareholders.”
Results for the Successor Period for the Thirteen Weeks Ended November 25, 2017, and Predecessor Period for the Thirteen Weeks Ended November 26, 2016(1) 
Successor net sales were $106.6 million and Predecessor net sales were $99.8 million
Successor net income was $10.2 million and Predecessor net income was $6.8 million
In order to present comparable financial information, the Company has also presented supplemental unaudited pro forma financial information for the thirteen weeks ended November 26, 2016, giving effect to the business combination (the “Business Combination”) with Conyers Park Acquisition Corp. (“Conyers Park”) and NCP-ATK Holdings, Inc. (“Atkins”) as if it had occurred on August 28, 2016. All references in this press release to results for the first quarter ended November 26, 2016, refer to such unaudited pro forma results. The Company believes this pro forma information provides helpful supplemental information with respect to the performance of Simply Good Foods, and particularly the Atkins business, during this period.
First Quarter 2018 Financial Highlights vs. First Quarter 2017 Pro-Forma
Net sales increased 6.8%, or $6.8 million, to $106.6 million
Gross profit margin of 49.5%, an increase of 70 basis points
Net income increased 11.7% to $10.2 million, an increase of $1.1 million
Earnings per diluted share (“EPS”) of $0.14, an increase of $0.01 per fully diluted share
Adjusted EBITDA(2) increased 6.6%, to $23.7 million.
(All comparisons above are with respect to the Predecessor's thirteen week pro forma first fiscal quarter ended November 26, 2016)




________________________________________
(1) On July 7, 2017, the Company completed the Business Combination between Atkins and Conyers Park, and as a result of the Business Combination, both Conyers Park and Atkins became wholly-owned subsidiaries of Simply Good Foods. Pursuant to GAAP and SEC requirements and the application of acquisition accounting, the Company's consolidated financial results are presented: (i) as of and for the thirteen weeks ended November 25, 2017 (Successor); and (ii) as of and for the thirteen weeks ended November 26, 2016 (Predecessor). All references to “Successor” refers to Simply Good Foods, and all references to “Predecessor” refers to Atkins prior to the Business Combination.
(2) Adjusted EBITDA is a non-GAAP financial measure. Please refer to “Non-GAAP Financial Measure and Related Information” and “Reconciliation of Adjusted EBITDA” in this press release for an explanation and reconciliations of this non-GAAP financial measure.

1



First Quarter 2018 Financial Results vs. First Quarter 2017 Pro-Forma
Net sales increased $6.8 million, or 6.8%, to $106.6 million driven by organic sales growth of 4.0%, and the acquisition of Wellness Foods, Inc., and its Simply Protein brand, which added a 2.8% increase to net sales.
Gross profit was $52.8 million for the first quarter of 2018, an increase of $4.0 million or 8.3%. Gross profit margin was 49.5% compared to 48.8% for the pro forma thirteen weeks ended November 26, 2016 driven primarily by favorable product mix and a reduction in input costs.
Net income increased $1.1 million, or 11.7%, to $10.2 million. The increase was primarily driven by the gross profit improvement, partially offset by a 7.0% increase in marketing spend and a 17.5% increase in general and administrative expenses as a result of public company costs and the addition of Wellness Foods.
Adjusted EBITDA, a non-GAAP financial measure used by the Company that makes certain adjustments to net income calculated under GAAP, increased 6.6% to $23.7 million.
(All comparisons above are with respect to the Predecessor's thirteen week pro forma first fiscal quarter ended November 26, 2016)
Balance Sheet and Cash Flow
As of November 25, 2017, the Company had cash and cash equivalents of $62.9 million and a $200.0 million term loan outstanding, resulting in a trailing twelve month pro forma combined Net Debt to Adjusted EBITDA ratio of 1.9x. The Company also has a $75.0 million revolving line of credit available for borrowing which is not currently being utilized, with no borrowings outstanding as of November 25, 2017.
Tax Cuts and Jobs Act
On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act into law. The change in the tax law will be partially effective in the current 2018 fiscal year and fully effective in the 2019 fiscal year. The primary impacts to the Company include repeal of the alternative minimum tax regime, decrease of the corporate income tax rate structure, and net operating loss limitations.  These changes will have a material impact to the value of deferred tax assets and liabilities, the value of the Company’s TRA, and the Company’s future taxable income and effective tax rate.
Additionally, we currently anticipate the enacted changes in the corporate tax rate and calculation of taxable income will have a favorable effect on our financial condition, profitability, and/or cash flows. The Company is analyzing the Tax Cuts and Jobs Act with its professional advisers. Until such analysis is complete, the full impact of the new tax law on the Company in future periods is uncertain, and no assurances can be made by the Company on any potential impacts.
Outlook
Simply Good Foods reaffirms its outlook for fiscal year 2018. The Company continues to expect net sales growth to be consistent with its previously stated long-term growth algorithm of 4% to 6% and Adjusted EBITDA growth at a slightly higher rate than net sales, including the impact of an incremental $2.0 million of public company expenses.

2



Conference Call and Webcast Information
The Company will host a conference call with members of the executive management team to discuss these results today, Tuesday, January 9, 2018 at 6:30 a.m. Mountain time (8:30 a.m. Eastern time). Investors interested in participating in the live call can dial 877-407-0792 from the U.S and International callers can dial 201-689-8263.
In addition, the call and supplementary presentation slides will be broadcast live over the Internet hosted at the “Investor Relations” section of the Company's website at http://www.thesimplygoodfoodscompany.com. The webcast will be archived for 30 days. A telephone replay will be available approximately two hours after the call concludes and will be available through Tuesday, January 23, 2018, by dialing 844-512-2921 from the U.S., or 412-317-6671 from international locations, and entering confirmation code 13674725.
About The Simply Good Foods Company
The Simply Good Foods Company, is the company created by the business combination of Conyers Park Acquisition Corp., with executive founders Jim Kilts and Dave West, long-time business leaders in the consumer products sector, and NCP-ATK Holdings, Inc. Today, our highly-focused product portfolio consists primarily of nutrition bars, ready-to-drink shakes, snacks and confectionery products marketed under the Atkins®, SimplyProtein®, Atkins Endulge®, and Atkins Harvest Trail brand names. Simply Good Foods will look to expand its platform through investment opportunities in the snacking space and broader food category. Over time, Simply Good Foods aspires to become a portfolio of brands that bring simple goodness, happiness and positive experiences to consumers and their families. For more information, please visit https://www.thesimplygoodfoodscompany.com.

Forward Looking Statements
Certain statements made herein are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by or include words such as “will”, “believe”, “expand”, “anticipate”, “expect” or the negative or other variations thereof and other similar words, phrases or expressions. These forward-looking statements include statements regarding future plans for the Company, the estimated or anticipated future results and benefits of the Company’s future plans and operations, future opportunities for the Company, and other statements that are not historical facts. These statements are based on the current expectations of the Company’s management and are not predictions of actual performance. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those described in the statements based on a number of factors, including but not limited to the following: changes in the business environment in which the Company operates including general financial, economic, regulatory and political conditions affecting the industry in which the Company operates; changes in consumer preferences and purchasing habits; the availability of or competition for other brands, assets or other opportunities for investment by the Company or to expand the Company’s business; changes in taxes, governmental laws, and regulations; competitive product and pricing activity; difficulties of managing growth profitably; the loss of one or more members of Company’s management teams; and other risk factors described from time to time in the Company’s Form 10-K, Form 10-Q, and Form 8-K reports (including all amendments to those reports) filed with the U.S. Securities and Exchange Commission from time to time. In addition, forward-looking statements provide the Company’s expectations, plans or forecasts of future events and views as of the date of this communication. Except as required by law, the Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date, and cautions investors not to place undue reliance on any such forward-looking statements. These forward-looking statements should not be relied upon as representing the Company’s assessments as of any date subsequent to the date of this communication.

3



Non-GAAP Financial Measure and Related Information
This communication includes Adjusted EBITDA, a financial measure that is not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company defines Adjusted EBITDA as net income (loss) before interest expense, income tax expense, depreciation and amortization with further adjustments to exclude the following items: stock-based compensation and warrant expense, transaction costs and IPO readiness, restructuring costs, management fees, transactional exchange impact, changes in fair value contingent consideration adjustments, and other non-core expenses. The Company believes that the inclusion of these supplementary adjustments in presenting Adjusted EBITDA are appropriate to provide additional information to investors and reflects more accurately operating results of the on-going operations. Adjusted EBITDA may not be comparable to other similarly titled captions of other companies due to differences in calculation. The Company's management believes that this non-GAAP measure of financial results provides useful information to management and investors regarding certain financial and business trends relating to the Company's financial condition and results of operations. You should review the reconciliation of the Company's non-GAAP financial measures to the comparable GAAP financial measures which are included in this press release, and not rely on any single financial measure to evaluate Atkins’ business.
Investor Contacts
Katie Turner/ Rachel Perkins
ICR
646-277-1228
Katie.turner@icrinc.com
Rachel.perkins@icrinc.com

4



The Simply Good Foods Company, and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands, except share data)
 
November 25, 2017
 
 
August 26, 2017
 
(Successor)
 
 
(Successor)
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
$
62,875

 
 
$
56,501

Accounts receivable, net
43,583

 
 
37,181

Inventories
31,665

 
 
29,062

Prepaid expenses
3,338

 
 
2,904

Other current assets
8,918

 
 
8,263

Total current assets
150,379

 
 
133,911


 
 
 
 
Long-term assets:
 
 
 
 
Property and equipment, net
2,457

 
 
2,105

Intangible assets, net
317,522

 
 
319,148

Goodwill
466,787

 
 
465,030

Other long-term assets
2,294

 
 
2,294

Total assets
$
939,439

 
 
$
922,488


 
 
 
 
Liabilities and stockholders' equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
$
17,455

 
 
$
14,859

Accrued interest
531

 
 
561

Accrued expenses and other current liabilities
14,524

 
 
15,042

Current portion of TRA liability
2,611

 
 
2,548

Current maturities of long-term debt
711

 
 
234

Total current liabilities
35,832

 
 
33,244


 
 
 
 
Long-term liabilities:
 
 
 
 
Long-term debt, less current maturities
191,701

 
 
191,856

Long-term portion of TRA liability
23,706

 
 
23,127

Deferred income taxes
78,680

 
 
75,559

Total liabilities
329,919

 
 
323,786

See commitments and contingencies (Note 8)


 
 



 
 
 
 
Stockholders' equity:
 
 
 
 
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued

 
 

Common stock, $0.01 par value, 600,000,000 shares authorized, 70,582,573 and 70,562,477 issued and outstanding, respectively
706

 
 
706

Additional paid-in-capital
611,437

 
 
610,138

Accumulated deficit
(1,943
)
 
 
(12,161
)
Accumulated other comprehensive (loss) income
(680
)
 
 
19

Total stockholders' equity
609,520

 
 
598,702

Total liabilities and stockholders' equity
$
939,439

 
 
$
922,488


5



The Simply Good Foods Company, and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
(Dollars in thousands, except share data)
 
Thirteen Weeks Ended
 
 
Thirteen Weeks Ended
 
November 25, 2017
 
 
November 26, 2016
 
(Successor)
 
 
(Predecessor)
Net sales
$
106,587

 
 
$
99,803

Cost of goods sold
53,830

 
 
51,091

Gross profit
52,757

 
 
48,712

 
 
 
 
 
Operating Expenses:
 
 
 
 
Distribution
4,817

 
 
4,369

Selling
3,903

 
 
4,293

Marketing
9,850

 
 
9,206

General and administrative
12,079

 
 
9,931

Depreciation and amortization
1,934

 
 
2,453

Change in fair value of contingent consideration - TRA liability
642

 
 

Other expense
246

 
 

Total operating expenses
33,471

 
 
30,252

 
 
 
 
 
Income from operations
19,286

 
 
18,460

 
 
 
 
 
Other income (expense):
 
 
 
 
Change in warrant liabilities

 
 
722

Interest expense
(3,019
)
 
 
(7,063
)
Gain (loss) on foreign currency transactions
355

 
 
(610
)
Other income (expense)
86

 
 
177

Total other expense
(2,578
)
 
 
(6,774
)
 
 
 
 
 
Income before income taxes
16,708

 
 
11,686

Income tax expense
6,490

 
 
4,899

Net income
$
10,218

 
 
$
6,787

 
 
 
 
 
Other comprehensive income:
 
 
 
 
Foreign currency translation adjustments
(699
)
 
 
303

Comprehensive income
$
9,519

 
 
$
7,090

 
 
 
 
 
Earnings per share from net income:
 
 
 
 
Basic
$
0.14

 
 
 
Diluted
$
0.14

 
 
 
Weighted average shares outstanding:
 
 
 
 
Basic
70,571,008

 
 
 
Diluted
71,240,590

 
 
 

6



The Simply Good Foods Company, and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
 
Thirteen Weeks Ended
 
 
Thirteen Weeks Ended
 
November 25, 2017
 
 
November 26, 2016
 
(Successor)
 
 
(Predecessor)
Operating activities
 
 
 
 
Net income
$
10,218

 
 
$
6,787

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
 
Depreciation and amortization
1,934

 
 
2,453

Amortization of deferred financing costs and debt discount
322

 
 
491

Stock compensation expense
1,068

 
 
526

Change in warrant liabilities

 
 
(722
)
Change in fair value of contingent consideration - TRA liability
642

 
 

Unrealized (gain) loss on foreign currency transactions
(355
)
 
 
610

Deferred income taxes
3,125

 
 
4,712

Changes in operating assets and liabilities:
 
 
 
 
Accounts receivable, net
(6,985
)
 
 
6,910

Inventories
(2,688
)
 
 
3,908

Prepaid expenses
(375
)
 
 
(815
)
Other current assets
53

 
 
(3,692
)
Accounts payable
2,627

 
 
(7,143
)
Accrued interest
(30
)
 
 
205

Accrued expenses and other current liabilities
(767
)
 
 
(5,628
)
Other
44

 
 
33

Net cash provided by operating activities
8,833


 
8,635

Investing activities
 
 
 
 
Purchases of property and equipment
(661
)
 
 
(41
)
Acquisition of business, net of cash acquired
(1,757
)
 
 

Cash withdrawn from trust account

 
 

Net cash used in investing activities
(2,418
)
 
 
(41
)
Financing activities
 
 
 
 
Proceeds from option exercises

 
 
109

Net cash provided by financing activities

 
 
109

Cash and cash equivalents
 
 
 
 
Net increase (decrease) in cash
6,415

 
 
8,703

Effect of exchange rate on cash
(41
)
 
 
(205
)
 
 
 
 
 
Cash at beginning of period
56,501

 
 
78,492

Cash and cash equivalents at end of period
$
62,875


 
$
86,990



7



Supplemental Unaudited Pro Forma Combined Thirteen Week Period Ended November 26, 2016

The following unaudited pro forma financial information has been prepared from the perspective of Atkins and its thirteen week quarter ended November 26, 2016. The unaudited pro forma income statement presents the historical consolidated statement of operations of Atkins for the thirteen weeks ended November 26, 2016, giving effect to the Business Combination as if it had occurred on August 28, 2016.

The unaudited pro forma financial statements give effect to the Business Combination in accordance with the acquisition method of accounting for business combinations. The historical financial information has been adjusted to give pro forma effect to events that are related and/or directly attributable to the Business Combination, are factually supportable and are expected to have a continuing impact on the results of the combined company. The adjustments presented on the unaudited pro forma financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the combined company upon consummation of the Business Combination.

The unaudited pro forma financial information is for illustrative purposes only. The financial results may have been different if the Business Combination actually been completed sooner. You should not rely on the unaudited pro forma financial information as being indicative of the historical results that would have been achieved if the Business Combination been completed as of the beginning of fiscal 2017.


8



Pro Forma Condensed Statement of Operations
For the pro forma combined 13-week period ended November 26, 2016
(Unaudited)
(In thousands)
 
 
Unaudited Historical (i)
 
 
 
Pro Forma
 
 
(Predecessor)
 
 
 
Unaudited
 
 
Thirteen Weeks Ended
 
Pro Forma Adjustments
 
Thirteen Weeks Ended
(In thousands)
 
November 26, 2016
 
 
November 26, 2016
Net sales
 
$
99,803

 
$

 
$
99,803

Cost of goods sold
 
51,091

 


51,091

Gross profit
 
48,712

 

 
48,712

 
 
 
 
 
 
 
Operating Expenses:
 
 
 
 
 
 
Distribution
 
4,369

 

 
4,369

Selling
 
4,293

 

 
4,293

Marketing
 
9,206

 

 
9,206

General and administrative
 
9,931

 
346

ii
10,277

Depreciation and amortization
 
2,453

 
(561
)
iii
1,892

Other expense
 

 

 

Total operating expenses
 
30,252

 
(215
)
 
30,037

 
 
 
 
 
 
 
Income from operations
 
18,460

 
215

 
18,675

 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
Change in warrant liabilities
 
722

 
(722
)
iv

Interest expense
 
(7,063
)
 
3,965

v
(3,098
)
Gain (loss) on foreign currency transactions
 
(610
)
 

 
(610
)
Other income
 
177

 

 
177

Total other expense
 
(6,774
)
 
3,243

 
(3,531
)
 
 
 
 
 
 
 
Income before income taxes
 
11,686

 
3,458

 
15,144

Income tax expense
 
4,899

 
1,098

vi
5,997

Net income
 
$
6,787

 
$
2,360

 
$
9,147


 
 
 
 
 
 
Other Financial Data (Unaudited):
 
 
 
 
 
 
Adjusted EBITDA (ix)
 
$
22,251

 
 
 
$
22,251

i. The amounts presented represent the Predecessor’s historical GAAP results of operations.
ii. The adjustment represents the incremental stock based compensation expense under the new Simply Good Foods omnibus incentive plan.
iii. The adjustment reflects the difference in the intangible asset amortization expense associated with the allocation of purchase price to intangible assets due to the Business Combination. The amortization expense decreased as more indefinite lived intangible assets were identified for the successor entity than the predecessor entity. The amount of amortizable intangible assets identified in the Business Combination decreased from $125.8 million to $88.0 million.
iv. The Simply Good Foods warrants are not liabilities and are accounted for as equity warrants. To make the periods comparable the adjustment represents the corresponding reversal of the predecessor fair value adjustment of expense.
v. The adjustment represents the expected interest expense associated with the new term loan and revolving debt facilities of Simply Good Foods. The predecessor entity had $337.2 million outstanding as of August 27, 2016 while the successor entity had $200.0 million outstanding. The long-term debt of the predecessor entity accrued interest at 6.25% on the first lien and 9.75% on the second lien while the successor debt accrues interest at 3 month LIBOR and 4%. The significant reduction in outstanding principal, and lower interest rates, drive significant expense savings.
vi. Represents the effective income tax rate of 39.6%
ix. Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation to its most directly comparable GAAP measure, see “Reconciliation of Adjusted EBITDA” within this section.

9



Comparison of Unaudited Results for the Thirteen Week period Ended November 25, 2017 and the Supplemental Pro Forma Thirteen Week Period Ended November 26, 2016
For comparative purposes, we are presenting an unaudited statement of operations for the thirteen week period ended November 25, 2017, compared to unaudited supplemental pro forma statement of operations for the thirteen week period ended November 26, 2016. The following table presents, for the periods indicated, selected information from our supplemented unaudited pro forma condensed consolidated financial results, including information presented as a percentage of net sales:
 
 
Historical
 
 
 Pro Forma
 
 
Successor
 
 
Predecessor
 
 
unaudited
 
 
 
 
unaudited
 
 
 
 
13-weeks ended
 
 
 
 
13-weeks ended
 
 
(Dollars in thousands, except share data)
 
November 25, 2017
 
% of sales
 
 
November 26, 2016
 
% of sales
Net sales
 
$
106,587

 
100.0
 %
 
 
$
99,803

 
100.0
 %
Cost of goods sold
 
53,830

 
50.5
 %
 
 
51,091

 
51.2
 %
Gross profit
 
52,757

 
49.5
 %
 
 
48,712

 
48.8
 %
 
 
 
 
 
 
 
 
 
 
Operating Expenses:
 
 
 
 
 
 
 
 
 
Distribution
 
4,817

 
4.5
 %
 
 
4,369

 
4.4
 %
Selling
 
3,903

 
3.7
 %
 
 
4,293

 
4.3
 %
Marketing
 
9,850

 
9.2
 %
 
 
9,206

 
9.2
 %
General and administrative
 
12,079

 
11.3
 %
 
 
10,277

 
10.3
 %
Depreciation and amortization
 
1,934

 
1.8
 %
 
 
1,892

 
1.9
 %
Change in fair value of contingent consideration - TRA liability
 
642

 
0.6
 %
 
 

 
 %
Other Expense
 
246

 
0.2
 %
 
 

 
 %
Total operating expenses
 
33,471

 
31.4
 %
 
 
30,037

 
30.1
 %
 
 
 
 
 
 
 
 
 
 
Income from operations
 
19,286

 
18.7
 %
 
 
18,675

 
18.7
 %
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
Changes in warrant liabilities
 

 
 %
 
 

 
 %
Interest expense
 
(3,019
)
 
(2.8
)%
 
 
(3,098
)
 
(3.1
)%
Gain (loss) on foreign currency transactions
 
355

 
0.3
 %
 
 
(610
)
 
(0.6
)%
Other income
 
86

 
0.1
 %
 
 
177

 
0.2
 %
Total other expense
 
(2,578
)
 
(2.4
)%
 
 
(3,531
)
 
(3.5
)%
 
 
 
 
 
 
 
 
 
 
Income before income taxes
 
16,708

 
15.7
 %
 
 
15,144

 
15.2
 %
Income tax expense
 
6,490

 
6.1
 %
 
 
5,997

 
6.0
 %
Net income
 
$
10,218

 
9.6
 %
 
 
$
9,147

 
9.2
 %
 
 
 
 
 
 
 
 
 
 
Earnings per share from net income:
 
 
 
 
 
 
 
 
 
Basic
 
$
0.14

 
 
 
 
$
0.13

 
 
Diluted
 
$
0.14

 
 
 
 
$
0.13

 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
Basic
 
70,571,008

 
 
 
 
70,571,008

 
 
Diluted
 
71,240,590

 
 
 
 
71,240,590

 
 



10



Reconciliation of Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure commonly used in our industry and should not be construed as an alternative to net income as an indicator of operating performance or as an alternative to cash flow provided by operating activities as a measure of liquidity (each as determined in accordance with GAAP). Simply Good Foods defines Adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) as net income (loss) before interest expense, income tax expense, depreciation and amortization with further adjustments to exclude the following items: stock-based compensation and warrant expense, transaction costs and IPO readiness costs, restructuring costs, management fees, transactional exchange impact, change in fair value of contingent consideration - TRA liability, and other non-core expenses. The Company believes that the inclusion of these supplementary adjustments in presenting Adjusted EBITDA are appropriate to provide additional information to investors and reflects more accurately operating results of the on-going operations. Adjusted EBITDA may not be comparable to other similarly titled captions of other companies due to differences in calculation.
The unaudited tables below provides a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, which is net income, for the thirteen week periods ending November 25, 2017 (Successor), November 26, 2016 (Predecessor), and pro forma period ended November 26, 2016.
Adjusted EBITDA Reconciliation:
(in thousands)
Thirteen Weeks Ended
 
 
Thirteen Weeks Ended
 
Thirteen Weeks Ended
November 25, 2017
 
 
November 26, 2016
 
November 26, 2016
(Successor)
 
 
(Predecessor)
 
(Pro Forma)
Net income
$
10,218

 
 
$
6,787

 
$
9,147

Interest
3,019

 
 
7,063

 
3,098

Taxes
6,490

 
 
4,899

 
5,997

Depreciation/Amortization
1,934

 
 
2,453

 
1,892

EBITDA
21,661

 
 
21,202

 
20,134

Stock Option and Warrant Expense
1,068

 
 
(196
)
 
872

Transaction Fees / IPO Readiness

 
 
8

 
8

Restructuring
246

 
 

 

Roark Management Fee

 
 
430

 
430

Frozen Licensing Media
63

 
 

 

Non-core legal costs
376

 
 
183

 
183

Change in fair value of contingent consideration - TRA liability
642

 
 

 

Other (1)
(346
)
 
 
624

 
624

Adjusted EBITDA
$
23,710

 
 
$
22,251

 
$
22,251

_____________________
Other items consist principally of exchange impact of foreign currency transactions as well as minor impacts of channel inventory returns


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View differences made from one to another to evaluate Simply Good Foods Co's financial trajectory

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