Simply Good Foods CoSMPL
Simply Good Foods Co Income Taxes Disclosure
Income Taxes
The sources of income before income taxes are as follows:
| 52-Weeks Ended | 53-Weeks Ended | 52-Weeks Ended | ||||||||||||||||||
| (In thousands) | August 30, 2025 | August 31, 2024 | August 26, 2023 | |||||||||||||||||
| Domestic | $ | 134,781 | $ | 184,580 | $ | 173,733 | ||||||||||||||
| Foreign | 1,122 | 1,470 | 1,959 | |||||||||||||||||
| Total income before income taxes | $ | 135,903 | $ | 186,050 | $ | 175,692 | ||||||||||||||
Income tax expense was comprised of the following:
| 52-Weeks Ended | 53-Weeks Ended | 52-Weeks Ended | ||||||||||||||||||
| (In thousands) | August 30, 2025 | August 31, 2024 | August 26, 2023 | |||||||||||||||||
| Current: | ||||||||||||||||||||
| Federal | $ | 24,591 | $ | 30,600 | $ | 24,740 | ||||||||||||||
| State and local | 7,665 | 7,392 | 6,128 | |||||||||||||||||
| Foreign | 30 | 383 | 659 | |||||||||||||||||
| Total current expense | $ | 32,286 | $ | 38,375 | $ | 31,527 | ||||||||||||||
| Deferred: | ||||||||||||||||||||
| Federal | $ | (1,087) | $ | 5,746 | $ | 8,804 | ||||||||||||||
| State and local | 552 | 2,502 | 1,740 | |||||||||||||||||
| Foreign | 538 | 118 | 46 | |||||||||||||||||
| Total deferred income tax expense | 3 | 8,366 | 10,590 | |||||||||||||||||
| Total tax expense | $ | 32,289 | $ | 46,741 | $ | 42,117 | ||||||||||||||
A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:
| 52-Weeks Ended | 53-Weeks Ended | 52-Weeks Ended | ||||||||||||||||||
| (In thousands) | August 30, 2025 | August 31, 2024 | August 26, 2023 | |||||||||||||||||
| Statutory income tax expense: | 21.0 | % | 21.0 | % | 21.0 | % | ||||||||||||||
| State income tax expense, net of federal | 4.1 | 4.2 | 4.0 | |||||||||||||||||
| Valuation allowance | 0.3 | — | — | |||||||||||||||||
| Taxes on foreign income above the U.S. tax | — | 0.1 | 0.2 | |||||||||||||||||
| Change in tax rate | 0.7 | 0.2 | — | |||||||||||||||||
| Non-deductible transaction costs | 0.1 | 0.5 | — | |||||||||||||||||
| Other permanent items | (2.4) | (0.9) | (1.2) | |||||||||||||||||
| Income tax expense | 23.8 | % | 25.1 | % | 24.0 | % | ||||||||||||||
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities at August 30, 2025, and August 31, 2024, were as follows:
| (In thousands) | August 30, 2025 | August 31, 2024 | ||||||||||||
| Deferred tax assets | ||||||||||||||
| Accounts receivable allowances | $ | 1,522 | $ | 1,371 | ||||||||||
| Accrued expenses | 5,937 | 4,520 | ||||||||||||
| Net operating loss carryforwards | 10,104 | 17,200 | ||||||||||||
| Share based compensation | 4,553 | 4,736 | ||||||||||||
| Lease liabilities | 13,916 | 9,956 | ||||||||||||
| Capitalized Section 174 Expenditures | 6,162 | 4,330 | ||||||||||||
| Tax capitalization of inventory costs | 2,573 | 1,517 | ||||||||||||
| Transaction costs | 1,664 | 1,838 | ||||||||||||
| Federal benefit of state taxes | 1,603 | 1,529 | ||||||||||||
| Other | 623 | 926 | ||||||||||||
| Deferred tax assets | 48,657 | 47,923 | ||||||||||||
| Valuation allowance | (356) | — | ||||||||||||
| Deferred tax asset, net of valuation allowance | $ | 48,301 | $ | 47,923 | ||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Excess tax over book depreciation | (4,781) | (3,954) | ||||||||||||
| Intangible assets | (197,031) | (200,130) | ||||||||||||
| Lease right-of-use assets | (11,090) | (8,774) | ||||||||||||
| Other | (1,414) | (1,077) | ||||||||||||
| Deferred tax liabilities | (214,316) | (213,935) | ||||||||||||
| Net deferred tax liabilities | $ | (166,015) | $ | (166,012) | ||||||||||
The Company had federal net operating loss carryforwards of $35.6 million and $63.0 million, state net operating loss carryforwards of $30.8 million and $44.2 million, and foreign net operating loss carryforwards of $0.4 million and $1.7 million as of August 30, 2025 and August 31, 2024, respectively. Federal net operating loss carryforwards do not expire and the state net operating loss carryforwards will begin to expire in 2036.
As of August 30, 2025, the Company has recorded total valuation allowances of $0.4 million, of which $0.4 million relates to valuation allowances on deferred tax assets related to foreign net operating loss carryforwards. This amount represents a full valuation allowance on the deferred tax assets of foreign entities within Australia. During the fifty-two weeks ended August 30, 2025, there was a $1.3 million decrease to the tax loss carryforwards in foreign jurisdictions. As the carryforwards were generated in jurisdictions where the Company has historically recognized book losses or does not have strong future earnings projections, the Company concluded it is more likely than not that the operating losses would not be realized, and thus maintained a full valuation allowance against the associated deferred tax assets.
As of August 30, 2025, the Company does not intend to indefinitely reinvest its foreign earnings within its subsidiary in Canada and has not recognized any tax liabilities related to this jurisdiction. It is the Company’s intention to reinvest the earnings of its other non-U.S. subsidiaries in its Australia and New Zealand operations. As of August 30, 2025, the Company has not made a provision for U.S. or additional foreign withholding taxes for any outside basis differences inherent in its investments in foreign subsidiaries that are indefinitely reinvested. It is not practicable to estimate the amount of deferred tax liability related to investments in these foreign subsidiaries.
As of August 30, 2025, and August 31, 2024, the Company has no unrecognized tax benefits.
The Company records interest and penalties associated with unrecognized tax benefits as a component of tax expense. As of August 30, 2025, and August 31, 2024, the Company has not accrued any interest or penalties on unrecognized tax benefits, as there is no position recorded as of these fiscal year-ends. No changes to the uncertain tax position balance are anticipated within the next 12 months and are not expected to materially affect the financial statements.
As of August 30, 2025, tax years 2018 to 2024 remain subject to examination in the United States by the Internal Revenue Service and state tax authorities and the tax years 2018 to 2024 remain subject to examination in other major foreign jurisdictions where the Company conducts business. State income tax returns are generally subject to examination for a period of three to six years after the filing of the respective return.
The future utilization of federal net operating loss carryforwards generated after 2017 is limited to 80% of taxable income. An additional limitation applies to the use of federal net operating loss and credit carryforwards, under Section 382 of the Internal Revenue Code of 1986, as amended, that is applicable if the Company experiences an "ownership change”. The Company has experienced various “ownership changes” in prior years. The resulting Section 382 limitations are not expected to materially affect the Company’s ability to utilize carryforwards. Future changes in the ownership of the Company could further limit the Company’s ability to utilize its net operating losses and credits.
In 2021, the Organization for Economic Co-operation and Development (OECD) announced Pillar Two Model Rules, which call for the taxation of large multinational corporations at a minimum rate of 15%. Many non-U.S. tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in fiscal 2025 with the adoption of additional components in later years or announced their plans to enact legislation in future years. The currently enacted Pillar Two Model Rules are not expected to have a significant effect on the Company’s provision for income taxes. The Company continues to monitor developments and evaluate effects, if any, of these provisions on its results of operations and cash flows for future years.
On July 4, 2025, the H.R.1 tax law was enacted in the U.S. (the “H.R.1 Tax Act”). The H.R.1 Tax Act includes provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The H.R.1 Tax Act has multiple effective dates, beginning in calendar year 2025 and extending through calendar year 2027. The Company is currently evaluating the impact of the H.R.1 Tax Act on its effective income tax rate, results of operations, financial condition and cash flows.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Oct 28, 2025 | Showing above |
| 2024 | Oct 29, 2024 | |
| 2023 | Oct 24, 2023 | |
| 2022 | Oct 21, 2022 | |
| 2021 | Oct 26, 2021 | |
| 2020 | Oct 28, 2020 | |
| 2019 | Oct 30, 2019 | |
| 2018 | Oct 24, 2018 | |
| 2017 | Nov 9, 2017 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.