The Simply Good Foods pany(SMPL) - 2023 Q1 - Quarterly Report

Financial Performance - Net sales for the thirteen weeks ended November 26, 2022, increased by $19.6 million, or 7.0$300.9 million compared to the same period in 2021, driven by price increases and e-commerce sales growth [90]. - Gross profit decreased by $5.6 million, or 4.8$111.0 million, resulting in a gross profit margin of 36.9%, down from 41.4% in the prior year [92]. - Net income for the thirteen weeks ended November 26, 2022, was $35.9 million, representing an increase of$14.7 million, or 69.5%, compared to $21.2 million in the prior year [90]. - Adjusted EBITDA for the thirteen weeks ended November 26, 2022, was$60.8 million, or 20.2% of net sales, compared to $65.6 million, or 23.3$4.8 million, or 7.4%, to $60.8 million for the thirteen weeks ended November 26, 2022, compared to$65.6 million for the same period in 2021 [98][100]. Costs and Expenses - Cost of goods sold rose by $25.2 million, or 15.3$189.9 million for the thirteen weeks ended November 26, 2022, primarily due to higher raw material and co-manufacturing costs [91]. - Operating expenses remained flat at approximately $58.5 million for the thirteen weeks ended November 26, 2022, compared to the same period in 2021 [93]. - Selling and marketing expenses decreased by$2.0 million, or 6.5%, for the thirteen weeks ended November 26, 2022, primarily due to timing of marketing spend [98]. - General and administrative expenses increased by $1.9 million, or 8.2$0.7 million increase in stock-based compensation [98]. Cash Flow and Financing - Cash provided by operating activities increased by $16.0 million to$8.7 million for the thirteen weeks ended November 26, 2022, compared to cash used of $7.3 million for the same period in 2021 [113]. - The outstanding balance of the Term Facility was$400.0 million as of November 26, 2022, with no principal payments required over the next twelve months [110]. - Net cash used in financing activities was $20.8 million for the thirteen weeks ended November 26, 2022, compared to$28.0 million for the same period in 2021 [115]. - The company had $54.1 million in cash as of November 26, 2022, sufficient to finance operations and growth strategy for at least the next twelve months [102]. Stock Repurchase - During the thirteen weeks ended November 26, 2022, the company repurchased 546,346 shares of common stock for$16.4 million, averaging a purchase price of $30.11 per share [111]. - As of November 26, 2022, approximately$71.5 million remained available for repurchases under the $150.0 million stock repurchase program [112]. Market Conditions and Outlook - The company expects inflationary cost pressures and supply chain challenges to continue for the remainder of fiscal year 2023 [81]. - The company continues to monitor macroeconomic conditions, including inflation and supply chain disruptions, which may impact consumer behavior and demand [80]. - The company expects to face logistics challenges and higher raw material costs in fiscal year 2023 [118]. - Price increases were instituted in the first and fourth quarters of fiscal year 2022 to mitigate rising costs [118]. - There is uncertainty whether the price increases will fully offset the effects of higher raw material and supply chain costs on financial results [118]. Sales Performance - North America net sales increased by 7.8$7.1 million for the thirteen weeks ended November 26, 2022, from $6.4 million in the prior year, primarily due to rising interest rates [93].