GlobeNewswire Inc | Apr 7, 2021 07:00AM EDT

April 07, 2021

DENVER, April 07, 2021 (GLOBE NEWSWIRE) -- The Simply Good Foods Company (Nasdaq: SMPL) (Simply Good Foods, or the Company), a developer, marketer and seller of branded nutritional foods and snacking products, today reported financial results for the thirteen and twenty-six weeks ended February27, 2021. The Companys fiscal second quarter 2021 and year-to-date period results include Quest results for the full period. The Company's fiscal second quarter 2020 results include thirteen-weeks of Quest and about twenty-three weeks for the year-to-date period.

Highlights:(1)

-- Net sales increased 1.5% driven by strong e-commerce and Quest performance -- Net income of $19.1 million versus $10.7 million -- Earnings per diluted share (EPS) of $0.19 versus $0.11 -- Adjusted Diluted EPS (3) of $0.25 versus $0.23 -- Adjusted EBITDA(2) increased 2.2% to $42.6 million -- Provides full fiscal year 2021 outlook:Net Sales expected to be in the $930-940 million rangeAdjusted EBITDA(2) expected to be in the $180-185 million range

In the second quarter we executed well against our initiatives driving sales and earnings growth in a challenging operating environment due to continued reduced consumer mobility related to COVID-19, said Joseph E. Scalzo, President and Chief Executive Officer of Simply Good Foods. Retail takeaway in measured channels was slightly better than the last quarter and our e-commerce momentum continued. Our earnings growth and strong cash flow have provided us with flexibility to invest in our business and deleverage. Our fiscal third quarter is off to a good start and were positioned well to deliver on our plans over the remainder of the fiscal year.

Fiscal Second Quarter 2021 Results

Net sales increased $3.5 million, or 1.5%, to $230.6 million. The core North America and international net sales increase contributed 1.0% and 1.7%, respectively, to total Company growth and the SimplyProtein brand divestiture and the European business exit were a combined 1.2% headwind. As expected, trade promotion expense was greater than last year supporting higher levels of in-store merchandising and display. Additionally, as discussed last quarter, second quarter net sales were affected by the timing of shipments related to the seasonal inventory build by certain retailers that occurred in the first quarter.

Total Simply Good Foods retail takeaway for the thirteen weeks ending February 28, 2021, increased 1.7% in the U.S. measured channels of IRI MULO + Convenience Stores, and outpaced the category. The Company estimates that its U.S. retail takeaway in measured and unmeasured channels increased mid-single-digits, on a percentage basis versus last year, driven by solid Quest measured channel performance and about a combined 60% year-over-year increase within the e-commerce channel for the Atkins and Quest brands.

Gross profit was $90.3 million for the second quarter of fiscal 2021, an increase of $4.9 million. Gross margin was 39.1%, an increase of 150 basis points versus last year. The year ago period was negatively affected by a non-cash $5.1 million inventory purchase accounting step-up adjustment related to the Quest acquisition that was a 220 basis point headwind in the second quarter of fiscal 2020. In the second quarter of fiscal 2021, gross profit growth was affected by higher trade promotion expense.

In the second quarter of fiscal 2021 the Company reported net income of $19.1 million compared to net income of $10.7 million for the comparable period of 2020. The increase in net income was primarily due to lower transaction and integrations costs related to the Quest acquisition. Selling and marketing expense declined $0.9 million, due to lower selling costs as a result of the Quest integration. Total Company second quarter of fiscal 2021 marketing and advertising expense was about the same as the year ago period due primarily to the decline of investments in the SimplyProtein brand. In the second quarter of fiscal 2021, core North America and international marketing and advertising expense increased 8.0%. For the full year, the Company continues to anticipate that marketing and advertising expense related to its core businesses will increase at least in-line with organic sales growth. General and administrative expenses declined $1.5 million as cost control measures and Quest acquisition synergies more than offset an increase in incentive compensation.

Adjusted EBITDA(2), a non-GAAP financial measure used by the Company that makes certain adjustments to net income calculated under GAAP, increased 2.2% to $42.6 million.

Interest expense was $8.0 million, a decline of $2.6 million versus the second quarter of fiscal 2020, due to the repayment of term loan debt.

In the second quarter of fiscal 2021, the Company reported Diluted EPS of $0.19 versus $0.11 in the year ago period. Adjusted Diluted EPS(3), a non-GAAP financial measure used by the Company that makes certain adjustments to Diluted EPS calculated under GAAP, was $0.25 versus $0.23 in the year ago period.

Year-to-Date Second Quarter 2021 Results Financial Highlights vs. Year-to-Date Second Quarter 2020

-- Net sales increased 21.8%, or $82.5 million, to $461.8 million -- Gross profit margin of 39.9%, an increase of 100 basis points -- Net income increased $35.8 million to $41.6 million -- Adjusted EBITDA(2) increased 24.2%, to $91.3 million -- Earnings per diluted share (EPS) of $0.41, an increase of $0.35 per fully diluted share -- Adjusted Diluted EPS of $0.54, an increase of $0.09 per fully diluted share

Net sales increased $82.5 million, or 21.8%, to $461.8 million. The core North America and international net sales increase contributed 20.9% and 2.3%, respectively, to total Company growth and the SimplyProtein brand divestiture and the European business exit were a 1.4% headwind.

Gross profit was $184.3 million for the twenty-six weeks ending February27, 2021, an increase of $36.7 million or 24.9%. The increase in gross profit was driven by the Quest acquisition. Gross margin was 39.9% in the first half of fiscal 2021, an increase of 100 basis points. Gross profit in the prior year was negatively affected by a non-cash $7.5 million inventory purchase accounting step-up adjustment related to the Quest acquisition. This non-cash inventory purchase accounting step-up was a 200 basis point headwind in the first half of fiscal 2020. Year-to-date second quarter fiscal 2021 gross profit growth was affected by the previously mentioned higher trade promotion expense as well as the effect of slightly unfavorable brand, channel and product mix.

Net income was $41.6 million compared to net income of $5.9 million for the comparable period of 2020. The increase was driven by sales and gross profit growth and a $37.5 million decline of costs related to the Quest acquisition and integration. Additionally, the increase in gross profit was offset by:

-- a 12.9% increase in selling and marketing expenses primarily due to the inclusion of Quest; -- a $5.7 million increase in general and administrative expenses to $52.0 million as a result of the inclusion of Quest. Integration synergies more than offset higher incentive compensation.

Adjusted EBITDA(2), a non-GAAP financial measure used by the Company that makes certain adjustments to net income calculated under GAAP, increased 24.2% to $91.3 million.

For the first half of fiscal 2021, the Company reported Diluted EPS of $0.41, an increase of $0.35, versus $0.06 in the year ago period. Adjusted Diluted EPS(3), a non-GAAP financial measure used by the Company that makes certain adjustments to diluted earnings per share calculated under GAAP, was $0.54 versus $0.45 in the year ago period. Weighted average total diluted shares outstanding were approximately 100.6 million versus approximately 97.6 million in the year ago period.

Balance Sheet and Cash Flow

In the second quarter of fiscal 2021, combined cash flow from operations and the proceeds from the previously mentioned sale of the SimplyProtein brand, were about $45.6 million. In February 2021, the Company repaid $25.0 million of its term loan debt, and at the end of the second quarter the outstanding principal balance was $556.5 million. As of February27, 2021, the Company had cash and cash equivalents of $91.3 million and a trailing twelve month Net Debt to Adjusted EBITDA ratio of 2.7x(4).

Outlook

Our business continues to perform well despite the significant effects over the last year due to reduced consumer mobility related to COVID-19. In the second half of the year, we anticipate overall marketplace trends will improve due to easier year ago comparisons, improving shopping trips in measured channels and an increase in consumer mobility. We have a portfolio of brands aligned with consumer mega-trends of both health and wellness, convenience and on-the-go nutrition. Over the remainder of the year we have solid plans in place for both the Atkins and Quest brands, including, innovation, advertising and in-store merchandising and display that we anticipate will drive solid sales and earnings growth.

Assuming consumer mobility in the United States remains at current levels and broad lockdowns are not reimposed, the Company anticipates full year fiscal 2021 net sales of $930-940 million and Adjusted EBITDA(2,5) of $180-185 million. The divestiture of SimplyProtein and the European business exit is about a combined 1.5% headwind to full year fiscal 2021 net sales growth versus a previous estimate of 2%. Given year-to-date gross margin performance, and reinstated trade promotion expense related to in-store merchandising and display in the second half of the year, the Company expects full year gross margin, apart from the inventory purchase accounting step-up in the year ago period, to be slightly lower compared to fiscal 2020. The Companys previous outlook indicated full year gross margin would be about the same as fiscal 2020. Additionally, due to solid cost control and acquisition synergies, the Company continues to anticipate Adjusted EBITDA margin expansion in fiscal 2021.

The Company anticipates 2021 Adjusted Diluted EPS(3,5) to be in the range of $1.07 to $1.11 versus $0.91 in 2020.

___________________________________(1) All comparisons for the second quarter ended February27, 2021 versus the second quarter ended February29, 2020.(2) Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") is a non-GAAP financial measure. Please refer to Reconciliation of Adjusted EBITDA in this press release for an explanation and reconciliation of this non-GAAP financial measure.(3) Adjusted Diluted Earnings Per Share is a non-GAAP financial measure. The Company excludes acquisition related costs, such as business transaction costs, integration expense and depreciation and amortization expense in calculating Adjusted Diluted Earnings Per Share. Please refer to Reconciliation of Adjusted Diluted Earnings Per Share in this press release for an explanation and reconciliation of this non-GAAP financial measure.(4) Net Debt to Adjusted EBITDA is a non-GAAP financial measure. Please refer to Reconciliation of Net Debt to Adjusted EBITDA in this press release for an explanation and reconciliation of this non-GAAP financial measure.(5) The Company does not provide a forward-looking reconciliation of Adjusted Diluted Earnings Per Share to Earnings Per Share or Adjusted EBITDA to Net Income, the most directly comparable GAAP financial measures, expected for 2021, because we are unable to provide such a reconciliation without unreasonable effort due to the unavailability of reliable estimates for certain components of consolidated net income and the respective reconciliations, including the timing of and amount of integration costs and restructuring charges associated with the Quest acquisition, and the inherent difficulty of predicting what the changes in these components will be throughout the fiscal year. As these items may vary greatly between periods, we are unable to address the probable significance of the unavailable information, which could significantly affect our future financial results.

Conference Call and Webcast Information

The Company will host a conference call with members of the executive management team to discuss these results today, Wednesday, April7, 2021 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 accompanying 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. A telephone replay will be available approximately two hours after the call concludes and will be available through Wednesday, April 21, 2021, by dialing 844-512-2921 from the U.S., or 412-317-6671 from international locations, and entering confirmation code 13717697.

About The Simply Good Foods Company

The Simply Good Foods Company (Nasdaq: SMPL), headquartered in Denver, Colorado, is a highly-focused food company with a product portfolio consisting primarily of nutrition bars, ready-to-drink shakes, sweet and salty snacks and confectionery products marketed under the Atkins, Quest, and Atkins Endulge brand names. Simply Good Foods is poised to expand its wellness platform through innovation and organic growth along with investment opportunities in the snacking space and broader food category. Simply Good Foods 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. For more information, please refer to http://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, expect, intends or other similar words, phrases or expressions. These forward-looking statements include the expected effects from the COVID-19 outbreak, statements regarding the integration of Quest, future plans for the Company, the estimated or anticipated future results and benefits of the Companys future plans and operations, future capital structure, future opportunities for the Company, and other statements that are not historical facts. These statements are based on the current expectations of the Companys management and are not predictions of actual performance. These statements are subject to a number of risks and uncertainties and the Companys business and actual results may differ materially. These risks and uncertainties include, but are not limited to the effect of the COVID-19 outbreak on the Company's business, suppliers (including its contract manufacturing and logistics suppliers), customers, consumers and employees along with disruptions or inefficiencies in the supply chain resulting from any effects of the COVID-19 outbreak; achieving the anticipated benefits of the Quest acquisition; difficulties and delays in achieving the synergies and cost savings in connection with the Quest acquisition; changes in the business environment in which the Company operates including general financial, economic, capital market, regulatory and political conditions affecting the Company and the industry in which the Company operates; changes in consumer preferences and purchasing habits; the Companys ability to maintain adequate product inventory levels to timely supply customer orders; changes in taxes, tariffs, duties, governmental laws and regulations; the availability of or competition for other brands, assets or other opportunities for investment by the Company or to expand the Companys business; competitive product and pricing activity; difficulties of managing growth profitably; the loss of one or more members of the Companys or Quests management team; and other risk factors described from time to time in the Companys 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 Companys 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 Companys assessments as of any date subsequent to the date of this communication.

Investor ContactMark PogharianVice President, Investor Relations, Treasury and Business Development The Simply Good Foods Company (720) 768-2681mpogharian@simplygoodfoodsco.com

The Simply Good Foods Company and SubsidiariesCondensed Consolidated Balance Sheets (Unaudited, dollars in thousands, except share data)

February 27, August 29, 2021 2020Assets Current assets: Cash and cash equivalents $ 91,307 $ 95,847 Accounts receivable, net 97,329 89,740 Inventories 82,771 59,085 Prepaid expenses 4,894 3,644 Other current assets 12,833 11,947 Total current assets 289,134 260,263 Long-term assets: Property and equipment, net 11,092 11,850 Intangible assets, net 1,146,039 1,158,768 Goodwill 543,134 544,774 Other long-term assets 32,119 32,790 Total assets $ 2,021,518 $ 2,008,445 Liabilities and stockholders? equity Current liabilities: Accounts payable $ 43,585 $ 32,240 Accrued interest 384 960 Accrued expenses and other current liabilities 36,313 38,007 Current maturities of long-term debt 278 271 Total current liabilities 80,560 71,478 Long-term liabilities: Long-term debt, less current maturities 548,884 596,879 Deferred income taxes 92,536 84,352 Other long-term liabilities 20,880 22,765 Total liabilities 742,860 775,474 See commitments and contingencies (Note 10) Stockholders? equity: Preferred stock, $0.01 par value, 100,000,000 ? ? shares authorized, none issuedCommon stock, $0.01 par value, 600,000,000shares authorized, 95,856,715 and 95,751,845shares 959 958 issued at February 27, 2021 and August 29,2020, respectivelyTreasury stock, 98,234 and 98,234 shares atcost at February 27, 2021 and August 29, 2020, (2,145 ) (2,145 )respectivelyAdditional paid-in-capital 1,098,375 1,094,507 Retained earnings 182,150 140,530 Accumulated other comprehensive loss (681 ) (879 )Total stockholders? equity 1,278,658 1,232,971 Total liabilities and stockholders? equity $ 2,021,518 $ 2,008,445

The Simply Good Foods Company and SubsidiariesCondensed Consolidated Statements of Operations and Comprehensive Income(Unaudited, dollars in thousands, except share data)

Thirteen Weeks Ended Twenty-Six Weeks Ended February 27, February 29, February 27, February 29, 2021 2020 2021 2020Net sales $ 230,607 $ 227,101 $ 461,759 $ 379,254 Cost of goods 140,342 141,707 277,453 231,654 soldGross profit 90,265 85,394 184,306 147,600 Operating expenses:Selling and 26,150 27,041 51,345 45,475 marketingGeneral and 26,562 28,103 51,977 46,248 administrativeDepreciation and 4,212 4,287 8,456 6,740 amortizationBusinesstransaction ? 694 ? 26,853 costsTotal operating 56,924 60,125 111,778 125,316 expenses Income from 33,341 25,269 72,528 22,284 operations Other income (expense):Interest income ? 85 3 1,464 Interest expense (7,995 ) (10,589 ) (16,367 ) (15,558 )Gain (loss) onforeign currency 975 (194 ) 984 (178 )transactionsOther income 112 8 159 45 Total other (6,908 ) (10,690 ) (15,221 ) (14,227 )expense Income before 26,433 14,579 57,307 8,057 income taxesIncome tax 7,313 3,922 15,687 2,193 expenseNet income $ 19,120 $ 10,657 $ 41,620 $ 5,864 Othercomprehensive income:Foreign currencytranslation 243 (141 ) 198 (141 )adjustmentsComprehensive $ 19,363 $ 10,516 $ 41,818 $ 5,723 income Earnings pershare from net income:Basic $ 0.20 $ 0.11 $ 0.43 $ 0.06 Diluted $ 0.19 $ 0.11 $ 0.41 $ 0.06 Weighted averageshares outstanding:Basic 95,734,591 95,339,489 95,712,057 92,524,061 Diluted 101,152,896 100,336,571 100,604,137 97,597,614

The Simply Good Foods Company and SubsidiariesCondensed Consolidated Statements of Cash Flows(Unaudited, dollars in thousands)

Twenty-Six Weeks Ended February February 27, 2021 29, 2020Operating activities Net income $ 41,620 $ 5,864 Adjustments to reconcile net income to net cash provided by (used in) operating activities:Depreciation and amortization 9,021 7,119 Amortization of deferred financing costs and debt 2,108 1,569 discountStock compensation expense 3,594 3,795 Unrealized loss (gain) on foreign currency (985 ) 178 transactionsDeferred income taxes 8,119 2,485 Amortization of operating lease right-of-use asset 2,253 1,652 Loss on operating lease right-of-use asset 681 ? impairmentGain on lease termination (154 ) ? Other 216 789 Changes in operating assets and liabilities, net of acquisition:Accounts receivable, net (7,015 ) (19,062 )Inventories (24,502 ) 768 Prepaid expenses (1,191 ) (873 )Other current assets (674 ) (5,808 )Accounts payable 10,275 (2,953 )Accrued interest (577 ) 175 Accrued expenses and other current liabilities (1,881 ) (8,760 )Other assets and liabilities (1,144 ) (1,824 )Net cash provided by (used in) operating activities 39,764 (14,886 ) Investing activities Purchases of property and equipment (449 ) (481 )Issuance of note receivable ? (1,250 )Acquisition of business, net of cash acquired ? (984,201 )Proceeds from sale of business 5,800 ? Investments in intangible assets (114 ) ? Net cash provided by (used in) investing activities 5,237 (985,932 ) Financing activities Proceeds from option exercises 527 931 Tax payments related to issuance of restricted stock (252 ) (80 )unitsPayments on finance lease obligations (168 ) (157 )Principal payments of long-term debt (50,000 ) (21,000 )Proceeds from issuance of common stock ? 352,542 Equity issuance costs ? (3,323 )Proceeds from issuance of long-term debt ? 460,000 Deferred financing costs ? (8,208 )Net cash (used in) provided by financing activities (49,893 ) 780,705 Cash and cash equivalents Net decrease in cash (4,892 ) (220,113 )Effect of exchange rate on cash 352 (113 )Cash at beginning of period 95,847 266,341 Cash and cash equivalents at end of period $ 91,307 $ 46,115

Reconciliation of Adjusted EBITDA

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 (loss) 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 (loss) income before interest income, interest expense, income tax expense (benefit), depreciation and amortization with further adjustments to exclude the following items: business transaction costs, stock-based compensation expense, inventory step-up, integration costs, non-core legal costs, and other non-core expenses. The Company believes that the inclusion of these supplementary adjustments in presenting Adjusted EBITDA, when used in conjunction with net (loss) income, are appropriate to provide additional information to investors, reflects more accurately operating results of the on-going operations, enhances the overall understanding of past financial performance and future prospects and allows for greater transparency with respect to the key metrics the Company uses in its financial and operational decision making. The Company also believes that Adjusted EBITDA is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industry. 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 tables below provide a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, which is net income, for the thirteen and twenty-six weeks ended February27, 2021 and February29, 2020:

(In thousands) Thirteen Weeks Ended Twenty-Six Weeks Ended February 27, February 29, February 27, February 29, 2021 2020 2021 2020Net income $ 19,120 $ 10,657 $ 41,620 $ 5,864 Interest income ? (85 ) (3 ) (1,464 )Interest expense 7,995 10,589 16,367 15,558 Income tax expense 7,313 3,922 15,687 2,193 Depreciation and 4,508 4,594 9,021 7,119 amortizationEBITDA 38,936 29,677 82,692 29,270 Business transaction ? 694 ? 26,853 costsStock-based 2,484 2,122 3,594 3,795 compensation expenseInventory step-up ? 5,085 ? 7,522 Integration of Quest 968 3,903 2,214 5,341 Restructuring 1,267 ? 3,786 ? Non-core legal costs ? 76 ? 555 Other ^(1) (1,011 ) 174 (945 ) 190 Adjusted EBITDA $ 42,644 $ 41,731 $ 91,341 $ 73,526

(1) Other items consist principally of exchange impact of foreign currency transactions and other expenses.

Reconciliation of Adjusted Diluted Earnings Per Share

Adjusted Diluted Earnings per Share. Adjusted Diluted Earnings per Share is a non-GAAP financial measure commonly used in our industry and should not be construed as an alternative to diluted earnings per share as an indicator of operating performance. Simply Good Foods defines Adjusted Diluted Earnings Per Share as diluted earnings per share before depreciation and amortization, business transaction costs, stock-based compensation expense, inventory step-up, integration costs, non-core legal costs, and other non-core expenses, on a theoretical tax effected basis of such adjustments. The tax effect of such adjustments to Adjusted Diluted Earnings Per Share is calculated by applying an overall assumed statutory tax rate to each gross adjustment as shown in the reconciliation to Adjusted EBITDA, as previously defined. The assumed statutory tax rate reflects a normalized effective tax rate estimated based on assumptions regarding the Company's statutory and effective tax rate for each respective reporting period, including the current and deferred tax effects of each adjustment, and is adjusted for the effects of tax reform, if any. The Company consistently applies the overall assumed statutory tax rate to periods throughout each fiscal year and reassesses the overall assumed statutory rate on annual basis. The Company believes that the inclusion of these supplementary adjustments in presenting Adjusted Diluted Earnings per Share, when used in conjunction with diluted earnings per share, are appropriate to provide additional information to investors, reflects more accurately operating results of the on-going operations, enhances the overall understanding of past financial performance and future prospects and allows for greater transparency with respect to the key metrics the Company uses in its financial and operational decision making. The Company also believes that Adjusted Diluted Earnings per Share is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industry. Adjusted Diluted Earnings per Share may not be comparable to other similarly titled captions of other companies due to differences in the non-GAAP calculation.

The following unaudited tables below provide a reconciliation of Adjusted Diluted Earnings Per Share to its most directly comparable GAAP measure, which is diluted earnings per share, for the thirteen and twenty-six weeks ended February27, 2021 and February29, 2020:

Thirteen Weeks Ended Twenty-Six Weeks Ended February February February February 27, 2021 29, 2020 27, 2021 29, 2020Diluted earnings per share $ 0.19 $ 0.11 $ 0.41 $ 0.06 Depreciation and 0.04 0.05 0.09 0.07 amortizationBusiness transaction costs ? 0.01 ? 0.28 Stock-based compensation 0.02 0.02 0.04 0.04 expenseInventory step-up ? 0.05 ? 0.08 Integration of Quest 0.01 0.04 0.02 0.05 Restructuring 0.01 ? 0.04 ? Non-core legal costs ? ? ? 0.01 Other ^(1) (0.01 ) ? (0.01 ) ? Tax effects of adjustments^ (0.02 ) (0.04 ) (0.05 ) (0.14 )(2)Rounding ^(3) 0.01 (0.01 ) ? ? Adjusted diluted earnings $ 0.25 $ 0.23 $ 0.54 $ 0.45 per share

(1) Other items consist principally of exchange impact of foreign currency transactions and other expenses.(2) This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. The tax effect of each adjustment is computed (i) by dividing the gross amount of the adjustment, as shown in the Adjusted EBITDA reconciliation, by the number of diluted weighted average shares outstanding for the applicable fiscal period and (ii) applying an overall assumed statutory tax rate of 27% for the thirteen and twenty-six weeks ended February27, 2021 and 26% for the thirteen and twenty-six weeks ended February29, 2020. (3) Adjusted Diluted Earnings Per Share amounts are computed independently for each quarter. Therefore, the sum of the quarterly Adjusted Diluted Earnings Per Share amounts may not equal the year to date Adjusted Diluted Earnings Per Share amounts due to rounding.

Reconciliation of Net Debt to Adjusted EBITDA

Net Debt to Adjusted EBITDA. Net Debt to Adjusted EBITDA is a non-GAAP financial measure which Simply Good Foods defines as the total debt outstanding under our credit agreement with Barclays Bank PLC and other parties (Credit Agreement), reduced by cash and cash equivalents, and divided by the trailing twelve months of Adjusted EBITDA, as previously defined.

The following unaudited table below provides a reconciliation of Net Debt to Adjusted EBITDA as of February27, 2021:

(In thousands) February 27, 2021Net Debt: Total debt outstanding under the Credit Agreement $ 556,500 Less: cash and cash equivalents (91,307 )Net Debt as of February 27, 2021 $ 465,193 Trailing twelve months Adjusted EBITDA: Add: Adjusted EBITDA for the thirteen weeks ended February $ 91,341 27, 2021Add: Adjusted EBITDA for the fiscal year ended August 29, 153,912 2020Less: Adjusted EBITDA for the thirteen weeks ended February (73,526 )29, 2020Trailing twelve months Adjusted EBITDA as of February 27, $ 171,727 2021 Net Debt to Adjusted EBITDA 2.7 x