Simply Good Foods (SMPL) risk factors, FY2024 10-K

Risks Related to our Business

1. 01Changing consumer preferences, habits, perceptions of certain nutritional snacking products and discretionary spending may negatively affect our brand loyalty, purchase frequency rate and net sales, and materially and adversely affect our business, financial condition and results of operations
2. 02We may not be able to compete successfully in the highly competitive nutritional snacking industry
3. 03products. If the use of weight management medication becomes more popular and more widely used and we are unable to communicate effectively to consumers how our products can support achieving or maintaining their weight management goals, our business could be materially and adversely affected
4. 04Our operations are dependent on a global supply chain and the effects of supply chain constraints and inflationary pressure on us, or our suppliers could adversely affect our operating results
5. 05If we cannot maintain or increase the prices of our products to cover elevated input costs, our margins may decrease
6. 06If we fail to implement our growth strategies successfully, timely, or at all, our ability to increase our revenue and operating profits could be materially and adversely affected
7. 07If we do not continually enhance our brand recognition, maintain or increase distribution of our products, attract new consumers to our brands and introduce new and innovative products, either on a timely basis or at all, our business may suffer
8. 08Our growth may be limited if we cannot maintain or secure additional shelf or retail space for our products in brick-and-mortar retailers
9. 09If the perception of our brands or organizational reputation are damaged, our consumers, distributors and retailers may react negatively, which could materially and adversely affect our business, financial condition and results of operations
10. 10Negative information, including inaccurate information, about us on social media may harm our reputation and brands, which could have a material and adverse effect on our business, financial condition and results of operations
11. 11We must appropriately allocate resources to maintain consumer awareness of our brands, build brand loyalty and generate interest in our products. Our marketing strategies and channels will evolve, and our programs may or may not be successful
12. 12Our geographic focus makes us particularly vulnerable to economic and other events and trends in North America
13. 13The actual or perceived effects of a disease outbreak, epidemic, pandemic or similar widespread public health concern, such as COVID-19, could negatively affect our operations, liquidity, financial condition and results of operations
14. 14We believe the effects on consumer demand and shopping behavior because of the COVID-19 pandemic could continue, including because of new virus variants and the effect these variants have on consumer shopping patterns

Risks Related to our Operating Model

1. 15Ingredient and packaging costs are volatile and may rise significantly, which may negatively affect the profitability of our business
2. 16We rely on sales to a limited number of retailers for a substantial portion of our net sales and losing one or more such retailers may materially harm our business. In addition, we maintain “at-will” contracts with these retailers, which do not require recurring or minimum purchase amounts of our products
3. 17The loss of, a disruption in or an inability to efficiently operate our fulfillment network could materially and adversely affect our business, financial condition, and results of operations
4. 18We intend to grow through mergers and acquisitions or joint ventures, and we may not successfully integrate, operate or realize the anticipated benefits of such business combinations
5. 19recognition. Potential acquisitions may entail significant transaction costs and require significant management time and distraction from our core business, even where we cannot consummate or decide not to pursue a particular transaction
6. 20We may not realize the expected benefits of the OWYN acquisition because of integration difficulties and other challenges
7. 21Our insurance policies may not provide adequate levels of coverage against claims
8. 22Loss of our key executive officers or other personnel, or an inability to attract and retain such management and other personnel, could negatively affect our business
9. 23We may not be able to adequately protect our intellectual property and other proprietary rights that are material to our business
10. 24Any inadequacy, failure or interruption of our information technology systems may harm our ability to effectively operate our business, and our business is subject to online security risks, including security breaches and identity theft

Regulatory Risks and Litigation Risks

1. 25All of our products must comply with federal, state and local regulations. Any non-compliance with the FDA or other applicable regulations could harm our business
2. 26Our advertising is regulated for accuracy, and if our advertising is determined to be false or misleading, we may face fines or sanctions
3. 27Changes in the legal and regulatory environment could limit our business activities, increase our operating costs, reduce demand for our products or result in litigation
4. 28Litigation or legal proceedings could expose us to significant liabilities and have a negative effect on our reputation

Risks Related to our Capital Structure

1. 29Our indebtedness could materially and adversely affect our financial condition and ability to operate our company, and we may incur additional debt
2. 30The credit facilities governing our debt arrangements contain financial and other covenants
3. 31Changes in interest rates may adversely affect our earnings and cash flows
4. 32We may need additional capital in the future, and it may not be available on acceptable terms or at all
5. 33We have incurred and will continue to incur significant costs because of operating as a public company, and our management has been and will continue to be required to devote substantial time to compliance efforts
6. 34If we cannot implement appropriate systems, procedures and controls, we may not be able to successfully procure, offer or ship our products, grow our business and account for transactions in an appropriate and timely manner
7. 35Our only significant asset is ownership of 100% of Atkins Intermediate Holdings, LLC and such ownership may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our common stock or satisfy our other financial obligations

Risks Related to our Common Stock

1. 36Our stock price may be volatile
2. 37We do not expect to declare any dividends in the foreseeable future
3. 38Anti-takeover provisions in our amended and restated certificate of incorporation and second amended and restated bylaws, and provisions of Delaware law, could impair a takeover attempt

Other Risks

1. 39Disruptions in the worldwide economy may materially and adversely affect our business, financial condition and results of operations
2. 40Our international operations expose us to regulatory, economic, political and social risks in the countries in which we operate
3. 41Our international operations expose us to fluctuations in exchange rates, which may materially and adversely affect our operating results