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• | Net sales were $431.4 million for fifty-two weeks ended August 25, 2018 and $56.3 million for the Successor Period July 7, 2017 to August 26, 2017 |
• | Income tax benefit was $17.4 million for fifty-two weeks ended August 25, 2018 and income tax expense was $0.3 million for the Successor Period July 7, 2017 to August 26, 2017 |
• | Net income was $70.5 million for fifty-two weeks ended August 25, 2018 and $0.5 million for the Successor Period July 7, 2017 to August 26, 2017 |
• | Net sales increased 8.9%, or $35.3 million, to $431.4 million |
• | Gross profit margin of 48.1%, an increase of 110 basis points |
• | Net income increased $41.8 million to $70.5 million, benefiting from changes to tax rates and other one-time gains |
• | Earnings per diluted share (“EPS”) of $0.96, an increase of $0.56 per fully diluted share |
• | Adjusted EBITDA(2) increased 8.4%, to $78.6 million. |
• | an increase in distribution costs due to higher net sales; |
• | $2.3 million in business transaction costs primarily related to the equity offering by one of our stockholders in February as well as due diligence costs associated with acquisition efforts; |
• | a 9.7% increase in selling expense; |
• | an 8.1% increase in marketing expense; |
• | an 18.0% increase in general and administrative expenses as a result of: |
◦ | public company costs; |
◦ | higher incentive compensation; and |
◦ | the acquisition of Wellness Foods in December 2016. |
• | Net sales increased 11.0%, or $10.7 million, to $108.3 million |
• | Gross profit margin of 49.2%, an increase of 60 basis points |
• | Net income increased $4.0 million to $11.7 million |
• | Earnings per diluted share (“EPS”) of $0.15, an increase of $0.04 per fully diluted share |
• | Adjusted EBITDA(2) increased 4.2%, to $18.1 million. |
• | an increase in distribution costs due to higher net sales; |
• | an increase in selling and marketing costs of $0.3 million and $1.2 million, respectively, driven by higher levels of brand building initiatives, advertising and digital marketing investments; |
• | a 33.7% increase in general and administrative expense as a result of: |
◦ | higher public company costs; |
◦ | higher incentive compensation; |
◦ | costs associated with the strategic sourcing initiative; and |
◦ | investments to enhance organizational capabilities in key functions, including preparation for future compliance requirements. |
August 25, 2018 | August 26, 2017 | |||||||
(Successor) | (Successor) | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 111,971 | $ | 56,501 | ||||
Accounts receivable, net | 36,622 | 37,181 | ||||||
Inventories | 30,001 | 29,062 | ||||||
Prepaid expenses | 2,069 | 2,904 | ||||||
Other current assets | 5,077 | 8,263 | ||||||
Total current assets | 185,740 | 133,911 | ||||||
Long-term assets: | ||||||||
Property and equipment, net | 2,565 | 2,105 | ||||||
Intangible assets, net | 312,643 | 319,148 | ||||||
Goodwill | 471,427 | 465,030 | ||||||
Other long-term assets | 2,230 | 2,294 | ||||||
Total assets | $ | 974,605 | $ | 922,488 | ||||
Liabilities and stockholders' equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 11,158 | $ | 14,859 | ||||
Accrued interest | 582 | 561 | ||||||
Accrued expenses and other current liabilities | 15,875 | 15,042 | ||||||
Current portion of TRA liability | 2,320 | 2,548 | ||||||
Current maturities of long-term debt | 648 | 234 | ||||||
Total current liabilities | 30,583 | 33,244 | ||||||
Long-term liabilities: | ||||||||
Long-term debt, less current maturities | 190,935 | 191,856 | ||||||
Long-term portion of TRA liability | 25,148 | 23,127 | ||||||
Deferred income taxes | 54,475 | 75,559 | ||||||
Other long-term liabilities | 863 | — | ||||||
Total liabilities | 302,004 | 323,786 | ||||||
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, 70,605,675 and 70,562,477 issued and outstanding, respectively | 706 | 706 | ||||||
Additional paid-in-capital | 614,399 | 610,138 | ||||||
Retained earnings (accumulated deficit) | 58,294 | (12,161 | ) | |||||
Accumulated other comprehensive (loss) income | (798 | ) | 19 | |||||
Total stockholders' equity | 672,601 | 598,702 | ||||||
Total liabilities and stockholders' equity | $ | 974,605 | $ | 922,488 |
52-Weeks Ended | From July 7, 2017 through August 26, 2017 | From August 28, 2016 through July 6, 2017 | |||||||||||
August 25, 2018 | |||||||||||||
(Successor) | (Successor) | (Predecessor) | |||||||||||
Net sales | $ | 431,429 | $ | 56,334 | $ | 339,837 | |||||||
Cost of goods sold | 223,873 | 35,941 | 179,998 | ||||||||||
Gross profit | 207,556 | 20,393 | 159,839 | ||||||||||
Operating expenses: | |||||||||||||
Distribution | 19,685 | 2,784 | 14,970 | ||||||||||
Selling | 17,802 | 2,322 | 13,905 | ||||||||||
Marketing | 41,290 | 4,615 | 33,589 | ||||||||||
General and administrative | 56,333 | 7,813 | 39,276 | ||||||||||
Depreciation and amortization | 7,672 | 1,000 | 8,617 | ||||||||||
Business transaction costs | 2,259 | — | 25,608 | ||||||||||
Gain in fair value change of contingent consideration - TRA liability | (2,848 | ) | — | — | |||||||||
Other expense | 633 | — | 141 | ||||||||||
Total operating expenses | 142,826 | 18,534 | 136,106 | ||||||||||
Income from operations | 64,730 | 1,859 | 23,733 | ||||||||||
Other income (expense): | |||||||||||||
Change in warrant liabilities | — | — | 722 | ||||||||||
Interest expense | (12,551 | ) | (1,662 | ) | (22,724 | ) | |||||||
Gain (loss) on foreign currency transactions | 97 | 513 | 133 | ||||||||||
Other income | 815 | 30 | 221 | ||||||||||
Total other expense | (11,639 | ) | (1,119 | ) | (21,648 | ) | |||||||
Income before income taxes | 53,091 | 740 | 2,085 | ||||||||||
Income tax (benefit) expense | (17,364 | ) | 290 | 4,570 | |||||||||
Net income (loss) | $ | 70,455 | $ | 450 | $ | (2,485 | ) | ||||||
Other comprehensive income: | |||||||||||||
Foreign currency translation adjustments | (817 | ) | 19 | (199 | ) | ||||||||
Comprehensive income | $ | 69,638 | $ | 469 | $ | (2,684 | ) | ||||||
Earnings per share from net income: | |||||||||||||
Basic | $ | 1.00 | $ | 0.01 | |||||||||
Diluted | $ | 0.96 | $ | 0.01 | |||||||||
Weighted average shares outstanding: | |||||||||||||
Basic | 70,582,149 | 70,562,477 | |||||||||||
Diluted | 73,681,355 | 71,254,770 |
52-Weeks Ended | From July 7, 2017 through August 26, 2017 | From August 28, 2016 through July 6, 2017 | |||||||||||
August 25, 2018 | |||||||||||||
(Successor) | (Successor) | (Predecessor) | |||||||||||
Operating activities | |||||||||||||
Net income | $ | 70,455 | $ | 450 | $ | (2,485 | ) | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||
Depreciation and amortization | 7,672 | 1,000 | 8,617 | ||||||||||
Amortization of deferred financing costs and debt discount | 1,312 | 192 | 1,950 | ||||||||||
Stock compensation expense | 4,029 | 412 | 2,441 | ||||||||||
Change in warrant liabilities | — | — | (722 | ) | |||||||||
Gain in fair value change of contingent consideration - TRA liability | (2,848 | ) | — | — | |||||||||
Unrealized gain (loss) on foreign currency transactions | (97 | ) | (513 | ) | (133 | ) | |||||||
Deferred income taxes | (21,108 | ) | (382 | ) | (3,880 | ) | |||||||
Loss on disposal of property and equipment | 128 | — | — | ||||||||||
Changes in operating assets and liabilities: | |||||||||||||
Accounts receivable, net | 267 | (5,556 | ) | 14,447 | |||||||||
Inventories | (1,081 | ) | 4,130 | 1,912 | |||||||||
Prepaid expenses | 847 | (1,107 | ) | 36 | |||||||||
Other current assets | 3,094 | 5,340 | (10,548 | ) | |||||||||
Accounts payable | (3,603 | ) | 2,089 | (7,246 | ) | ||||||||
Accrued interest | 21 | 561 | (3,615 | ) | |||||||||
Accrued expenses and other current liabilities | 1,962 | (34,096 | ) | 21,459 | |||||||||
Other | (12 | ) | 124 | (294 | ) | ||||||||
Net cash provided by (used in) operating activities | 61,038 | (27,356 | ) | 21,939 | |||||||||
Investing activities | |||||||||||||
Purchases of property and equipment | (1,770 | ) | (458 | ) | (498 | ) | |||||||
Proceeds from sale of property and equipment | 14 | — | — | ||||||||||
Acquisition of business, net of cash acquired | (1,757 | ) | (600,825 | ) | (19,960 | ) | |||||||
Cash withdrawn from trust account | — | 403,979 | — | ||||||||||
Net cash used in investing activities | (3,513 | ) | (197,304 | ) | (20,458 | ) | |||||||
Financing activities | |||||||||||||
Proceeds from option exercises | 120 | — | 109 | ||||||||||
Excess tax benefits of stock-based compensation | — | — | (59 | ) | |||||||||
Tax payments related to issuance of restricted stock units | (120 | ) | — | — | |||||||||
Proceeds from warrant exercises | 232 | — | — | ||||||||||
Deferred financing costs | (319 | ) | — | — | |||||||||
Principal payments of long-term debt | (1,500 | ) | — | (53,586 | ) | ||||||||
Proceeds from issuance of private placement equity, net of issuance costs | — | 97,000 | — | ||||||||||
Proceeds from issuance of long term debt, net of issuance costs | — | 191,899 | — | ||||||||||
Payment of Conyers Park deferred equity issuance costs | — | (8,100 | ) | — | |||||||||
Net cash used in (provided by) financing activities | (1,587 | ) | 280,799 | (53,536 | ) | ||||||||
Cash and cash equivalents | |||||||||||||
Net increase (decrease) in cash | 55,938 | 56,139 | (52,055 | ) | |||||||||
Effect of exchange rate on cash | (468 | ) | 159 | (10 | ) | ||||||||
Cash at beginning of period | 56,501 | 203 | 78,492 | ||||||||||
Cash and cash equivalents at end of period | $ | 111,971 | $ | 56,501 | $ | 26,427 |
Historical (i) | Unaudited | ||||||||||||||||
From July 7, 2017 through August 26, 2017 | From August 28, 2016 through July 6, 2017 | Pro Forma Adjustments | 52-Weeks Ended | ||||||||||||||
August 26, 2017 | |||||||||||||||||
(In thousands) | (Successor) | (Predecessor) | (Pro Forma) | ||||||||||||||
Net sales | $ | 56,334 | $ | 339,837 | $ | — | $ | 396,171 | |||||||||
Cost of goods sold | 35,941 | 179,998 | (5,989 | ) | ii | 209,950 | |||||||||||
Gross profit | 20,393 | 159,839 | 5,989 | 186,221 | |||||||||||||
Operating expenses: | |||||||||||||||||
Distribution | 2,784 | 14,970 | — | 17,754 | |||||||||||||
Selling | 2,322 | 13,905 | — | 16,227 | |||||||||||||
Marketing | 4,615 | 33,589 | — | 38,204 | |||||||||||||
General and administrative | 7,813 | 39,276 | 635 | iii | 47,724 | ||||||||||||
Depreciation and amortization | 1,000 | 8,617 | (1,979 | ) | iv | 7,638 | |||||||||||
Business transaction costs | — | 25,608 | (25,608 | ) | v | — | |||||||||||
Other expense | — | 141 | — | 141 | |||||||||||||
Total operating expenses | 18,534 | 136,106 | (26,952 | ) | 127,688 | ||||||||||||
Income from operations | 1,859 | 23,733 | 32,941 | 58,533 | |||||||||||||
Other income (expense): | |||||||||||||||||
Change in warrant liabilities | — | 722 | (722 | ) | vi | — | |||||||||||
Interest expense | (1,662 | ) | (22,724 | ) | 12,475 | vii | (11,911 | ) | |||||||||
Gain (loss) on foreign currency transactions | 513 | 133 | — | 646 | |||||||||||||
Other income | 30 | 221 | — | 251 | |||||||||||||
Total other expense | (1,119 | ) | (21,648 | ) | 11,753 | (11,014 | ) | ||||||||||
Income before income taxes | 740 | 2,085 | 44,694 | 47,519 | |||||||||||||
Income tax (benefit) expense | 290 | 4,570 | 13,958 | viii | 18,818 | ||||||||||||
Net income (loss) | $ | 450 | $ | (2,485 | ) | $ | 30,736 | $ | 28,701 | ||||||||
Other financial data: | |||||||||||||||||
Adjusted EBITDA (ix) | $ | 8,654 | $ | 63,889 | $ | 72,543 |
i. | The amounts presented represent the Predecessor’s historical GAAP results of operations. |
ii. | The adjustment represents a non-cash, one time inventory fair value adjustment recorded in conjunction with the Business Combination and was recognized in the successor period, and is not indicative of future cost of goods sold. |
iii. | The adjustment represents the incremental stock-based compensation expense under the Simply Good Foods omnibus incentive plan. |
iv. | 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 additional 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. |
v. | Business combination transaction expenses primarily consist of fees related to the Business Combination and the Company’s acquisition activities. Refer to Note 3, Business Combination, of the consolidated financial statements for additional details. |
vi. | Predecessor warrants were accounted for as warrant liabilities, which were exercised and settled with the Business Combination. |
vii. | Represents the adjustment necessary to arrive at interest expense associated with the 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 plus 4%. The significant reduction in outstanding principal, and lower interest rates, drive significant expense savings. Refer to Note 7, Long-Term Debt and Line of Credit, of the consolidated financial statements for additional details on long-term debt. |
viii. | Represents the adjustment necessary to arrive at an 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. |
Historical | Pro Forma | ||||||||||||||
Successor | Predecessor | ||||||||||||||
audited | unaudited | ||||||||||||||
52-Weeks Ended | % of sales | 52-Weeks Ended | % of sales | ||||||||||||
(In thousands) | August 25, 2018 | August 26, 2017 | |||||||||||||
Net sales | $ | 431,429 | 100.0 | % | $ | 396,171 | 100.0 | % | |||||||
Cost of goods sold | 223,873 | 51.9 | % | 209,950 | 53.0 | % | |||||||||
Gross profit | 207,556 | 48.1 | % | 186,221 | 47.0 | % | |||||||||
Operating expenses: | |||||||||||||||
Distribution | 19,685 | 4.6 | % | 17,754 | 4.5 | % | |||||||||
Selling | 17,802 | 4.1 | % | 16,227 | 4.1 | % | |||||||||
Marketing | 41,290 | 9.6 | % | 38,204 | 9.6 | % | |||||||||
General and administrative | 56,333 | 13.1 | % | 47,724 | 12.0 | % | |||||||||
Depreciation and amortization | 7,672 | 1.8 | % | 7,638 | 1.9 | % | |||||||||
Business transaction costs | 2,259 | 0.5 | % | — | — | % | |||||||||
Gain in fair value change of contingent consideration - TRA liability | (2,848 | ) | (0.7 | )% | — | — | % | ||||||||
Other expense | 633 | 0.1 | % | 141 | — | % | |||||||||
Total operating expenses | 142,826 | 33.1 | % | 127,688 | 32.2 | % | |||||||||
Income from operations | 64,730 | 15.0 | % | 58,533 | 14.8 | % | |||||||||
Other income (expense): | |||||||||||||||
Interest expense | (12,551 | ) | (2.9 | )% | (11,911 | ) | (3.0 | )% | |||||||
Gain on foreign currency transactions | 97 | — | % | 646 | 0.2 | % | |||||||||
Other income | 815 | 0.2 | % | 251 | 0.1 | % | |||||||||
Total other expense | (11,639 | ) | (2.7 | )% | (11,014 | ) | (2.8 | )% | |||||||
Income before income taxes | 53,091 | 12.3 | % | 47,519 | 12.0 | % | |||||||||
Income tax (benefit) expense | (17,364 | ) | (4.0 | )% | 18,818 | 4.7 | % | ||||||||
Net income | $ | 70,455 | 16.3 | % | $ | 28,701 | 7.2 | % | |||||||
Other financial data: | |||||||||||||||
Adjusted EBITDA | $ | 78,602 | 18.2 | % | $ | 72,543 | 18.3 | % | |||||||
Earnings per share from net income: | |||||||||||||||
Basic | $ | 1.00 | $ | 0.41 | |||||||||||
Diluted | $ | 0.96 | $ | 0.40 | |||||||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 70,582,149 | 70,562,477 | |||||||||||||
Diluted | 73,681,355 | 71,254,770 |
i. | For comparability purposes 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. The Company has assumed the pro forma weighted average shares outstanding of the Predecessor to be the same as the comparable period of the Successor as the pro forma results of the predecessor is adjusted for the incremental difference in stock-based compensation and the treatment of the warrant liabilities. Prior to the Business Combination the predecessor had 508,219 shares of Common Stock outstanding. |
Adjusted EBITDA Reconciliation: (In thousands) | 52-Weeks Ended | From July 7, 2017 through August 26, 2017 | From August 28, 2016 through July 6, 2017 | 52-Weeks Ended | |||||||||||||
August 25, 2018 | August 26, 2017 | ||||||||||||||||
(Successor) | (Successor) | (Predecessor) | (Pro Forma) | ||||||||||||||
Net income (loss) | $ | 70,455 | $ | 450 | $ | (2,485 | ) | $ | 28,701 | ||||||||
Interest expense | 12,551 | 1,662 | 22,724 | 11,911 | |||||||||||||
Interest income | (301 | ) | — | — | — | ||||||||||||
Income tax (benefit) expense | (17,364 | ) | 290 | 4,570 | 18,818 | ||||||||||||
Depreciation and amortization | 7,672 | 1,000 | 8,617 | 7,638 | |||||||||||||
EBITDA | 73,013 | 3,402 | 33,426 | 67,068 | |||||||||||||
Business transaction costs | 2,259 | — | 25,608 | — | |||||||||||||
Stock-based compensation and warrant expense | 4,029 | 412 | 1,719 | 3,488 | |||||||||||||
Transaction fees / IPO readiness | — | — | 371 | 371 | |||||||||||||
Restructuring | 631 | — | 167 | 167 | |||||||||||||
Roark management fee | — | — | 1,200 | 1,200 | |||||||||||||
Recall receivable reserve | — | (1,195 | ) | — | (1,195 | ) | |||||||||||
Frozen licensing media | 250 | 456 | 794 | 1,250 | |||||||||||||
Non-core legal costs | 1,314 | 96 | 723 | 819 | |||||||||||||
Gain in fair value change of contingent consideration - TRA liability | (2,848 | ) | — | — | — | ||||||||||||
Purchase accounting inventory step-up | — | 5,989 | — | — | |||||||||||||
Other (1) | (46 | ) | (506 | ) | (119 | ) | (625 | ) | |||||||||
Adjusted EBITDA | $ | 78,602 | $ | 8,654 | $ | 63,889 | $ | 72,543 |
(1) | Other items consist principally of exchange impact of foreign currency transactions and other expenses. |
Historical (i) | Unaudited | |||||||||||||||
From July 7, 2017 through August 26, 2017 | From May 28, 2017 through July 6, 2017 | Pro Forma Adjustments | 13-weeks ended | |||||||||||||
August 26, 2017 | ||||||||||||||||
(In thousands) | (Successor) | (Predecessor) | (Pro Forma) | |||||||||||||
Net sales | $ | 56,334 | $ | 41,223 | $ | — | $ | 97,557 | ||||||||
Cost of goods sold | 35,941 | 20,239 | (5,989 | ) | 50,191 | |||||||||||
Gross profit | 20,393 | 20,984 | 5,989 | 47,366 | ||||||||||||
Operating expenses: | ||||||||||||||||
Distribution | 2,784 | 1,557 | — | 4,341 | ||||||||||||
Selling | 2,322 | 1,284 | — | 3,606 | ||||||||||||
Marketing | 4,615 | 4,620 | — | 9,235 | ||||||||||||
General and administrative | 7,813 | 5,301 | (110 | ) | iii | 13,004 | ||||||||||
Depreciation and amortization | 1,000 | 1,208 | (298 | ) | iv | 1,910 | ||||||||||
Business transaction costs | — | 25,608 | (25,608 | ) | v | — | ||||||||||
Other expense | — | 66 | — | 66 | ||||||||||||
Total operating expenses | 18,534 | 39,644 | (26,016 | ) | 32,162 | |||||||||||
Income from operations | 1,859 | (18,660 | ) | 32,005 | 15,204 | |||||||||||
Other income (expense): | ||||||||||||||||
Change in warrant liabilities | — | — | — | vi | — | |||||||||||
Interest expense | (1,662 | ) | (2,665 | ) | 1,349 | vii | (2,978 | ) | ||||||||
Gain on foreign currency transactions | 513 | 127 | — | 640 | ||||||||||||
Other income | 30 | (61 | ) | — | (31 | ) | ||||||||||
Total other expense | (1,119 | ) | (2,599 | ) | 1,349 | (2,369 | ) | |||||||||
Income before income taxes | 740 | (21,259 | ) | 33,354 | 12,835 | |||||||||||
Income tax expense | 290 | (4,177 | ) | 8,970 | viii | 5,083 | ||||||||||
Net income | $ | 450 | $ | (17,082 | ) | $ | 24,384 | $ | 7,752 |
i. | The amounts presented represent the Successor’s and Predecessor’s historical GAAP results of operations. |
ii. | The adjustment represents a non-cash, one time inventory fair value adjustment recorded in conjunction with the Business Combination and was recognized in the successor period, and is not indicative of future cost of good sold. |
iii. | The adjustment represents the incremental stock based compensation expense incurred under the Simply Good Foods Omnibus Incentive Plan. |
iv. | 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. |
v. | Business combination transaction expenses primarily consist of fees related to the Business Combination and the Company’s acquisition activities. |
vi. | Predecessor warrants were accounted for as warrant liabilities, which were exercised and settled with the Business Combination. |
vii. | Represents the adjustment necessary to arrive at interest expense associated with the 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 plus 4%. The significant reduction in outstanding principal, and lower interest rates, drive significant expense savings. |
viii. | Represents the adjustment necessary to arrive at an effective income tax rate of 39.6%. |
Historical | Pro Forma | ||||||||||||||
Successor | Predecessor | ||||||||||||||
unaudited | unaudited | ||||||||||||||
13-weeks ended | 13-weeks ended | ||||||||||||||
(In thousands) | August 25, 2018 | % of sales | August 26, 2017 | % of sales | |||||||||||
Net sales | $ | 108,262 | 100.0 | % | $ | 97,557 | 100.0 | % | |||||||
Cost of goods sold | 55,004 | 50.8 | % | 50,191 | 51.4 | % | |||||||||
Gross profit | 53,258 | 49.2 | % | 47,366 | 48.6 | % | |||||||||
Operating expenses: | |||||||||||||||
Distribution | 4,821 | 4.5 | % | 4,341 | 4.4 | % | |||||||||
Selling | 3,952 | 3.7 | % | 3,606 | 3.7 | % | |||||||||
Marketing | 10,385 | 9.6 | % | 9,235 | 9.5 | % | |||||||||
General and administrative | 17,385 | 16.1 | % | 13,004 | 13.3 | % | |||||||||
Depreciation and amortization | 1,879 | 1.7 | % | 1,910 | 2.0 | % | |||||||||
Business transaction costs | 347 | 0.3 | % | — | — | % | |||||||||
Gain in fair value change of contingent consideration - TRA liability | (436 | ) | (0.4 | )% | — | — | % | ||||||||
Other expense | 66 | 0.1 | % | 66 | 0.1 | % | |||||||||
Total operating expenses | 38,399 | 35.5 | % | 32,162 | 33.0 | % | |||||||||
Income from operations | 14,859 | 13.7 | % | 15,204 | 15.6 | % | |||||||||
Other income (expense): | |||||||||||||||
Change in warrant liabilities | — | — | % | — | — | % | |||||||||
Interest expense | (3,382 | ) | (3.1 | )% | (2,978 | ) | (3.1 | )% | |||||||
Gain (loss) on foreign currency transactions | (22 | ) | — | % | 640 | 0.7 | % | ||||||||
Other income | 340 | 0.3 | % | (31 | ) | — | % | ||||||||
Total other expense | (3,064 | ) | (2.8 | )% | (2,369 | ) | (2.4 | )% | |||||||
Income before income taxes | 11,795 | 10.9 | % | 12,835 | 13.2 | % | |||||||||
Income tax expense | 89 | 0.1 | % | 5,083 | 5.2 | % | |||||||||
Net income | $ | 11,706 | 10.8 | % | $ | 7,752 | 7.9 | % | |||||||
Earnings per share from net income: | |||||||||||||||
Basic | $ | 0.17 | $ | 0.11 | |||||||||||
Diluted | $ | 0.15 | $ | 0.11 | |||||||||||
Weighted average shares outstanding: (i) | |||||||||||||||
Basic | 70,592,536 | 70,562,447 | |||||||||||||
Diluted | 76,186,430 | 71,254,770 |
i. | For comparability purposes 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. The Company has assumed the pro forma weighted average shares outstanding of the Predecessor to be the same as the comparable period of the Successor as the pro forma results of the predecessor is adjusted for the incremental difference in stock-based compensation and the treatment of the warrant liabilities. Prior to the Business Combination the predecessor had 508,219 shares of Common Stock outstanding. |
Adjusted EBITDA Reconciliation: (in 000's) | 13-Weeks Ended | 13-Weeks Ended | ||||||
August 25, 2018 | August 26, 2017 | |||||||
(Successor) | (Pro Forma) | |||||||
Net income | $ | 11,706 | $ | 7,752 | ||||
Interest expense | 3,382 | 2,978 | ||||||
Interest income | (301 | ) | — | |||||
Income tax expense | 89 | 5,083 | ||||||
Depreciation and amortization | 1,879 | 1,910 | ||||||
EBITDA | 16,755 | 17,723 | ||||||
Business transaction costs | 347 | — | ||||||
Stock-based compensation and warrant expense | 1,048 | 872 | ||||||
Restructuring | 64 | 93 | ||||||
Roark management fee | — | (170 | ) | |||||
Recall receivable reserve | — | (1,195 | ) | |||||
Frozen licensing media | 62 | 456 | ||||||
Non-core legal costs | 261 | 201 | ||||||
Loss (gain) in fair value change of contingent consideration - TRA liability | (436 | ) | — | |||||
Other (1) | 44 | (570 | ) | |||||
Adjusted EBITDA | $ | 18,145 | $ | 17,410 |
(1) | Other items consist principally of exchange impact of foreign currency transactions and other expenses. |
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