Simply Good Foods Co - 10-Q filing on 2021-07-08

Earnings Per Share

9 Months Ended

May 29, 2021

Basic earnings or loss per share is based on the weighted average number of common shares issued and outstanding. In computing diluted earnings per share, basic earnings per share is adjusted for the assumed issuance of all potentially dilutive securities. In periods in which the Company has a net loss, diluted earnings per share is based on the weighted average number of common shares issued and outstanding as the effect of including common stock equivalents outstanding would be anti-dilutive.

The Company has outstanding liability-classified Private Warrants to purchase 6,700,000 shares of the Company’s common stock. During periods when the effect is dilutive, the Company assumes share settlement of the instruments as of the beginning of the reporting period and adjusts the numerator to remove the change in fair value of the warrant liability and adjusts the denominator to include the dilutive shares, calculated using the treasury stock method. During periods when the impact is anti-dilutive, the share settlement is excluded.

The following table reconciles the numerators and denominators used in the computations of both basic and diluted earnings per share:


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
(In thousands, except per share data)	May 29, 2021		May 30, 2020		May 29, 2021		May 30, 2020
Basic earnings per share computation:
Numerator:
Net income	$	5,895	$	48,112	$	22,634	$	104,928
Denominator:
Weighted average common shares - basic	95,767,629		95,378,495		95,730,581		93,475,539
Basic earnings per share from net income	$	0.06	$	0.50	$	0.24	$	1.12

Diluted earnings per share computation:
Numerator:
Net income	$	5,895	$	48,112	$	22,634	$	104,928
Gain in fair value change of warrant liability	—		(31,703)		—		(82,655)
Numerator for diluted earnings per share	$	5,895	$	16,409	$	22,634	$	22,273
Denominator:
Weighted average common shares outstanding - basic	95,767,629		95,378,495		95,730,581		93,475,539
Private Warrants	—		2,285,110		—		3,392,317
Employee stock options	1,465,477		630,408		1,191,593		1,028,218
Non-vested shares	356,550		28,303		275,006		37,476
Weighted average common shares - diluted	97,589,656		98,322,316		97,197,180		97,933,550
Diluted earnings per share from net income	$	0.06	$	0.17	$	0.23	$	0.23

Diluted earnings per share calculations for the thirteen and thirty-nine weeks ended May 29, 2021 excluded 4.3 million and 3.9 million shares, issuable upon exercise of Private Warrants, respectively, that would have been anti-dilutive.

Diluted earnings per share calculations for the thirteen and thirty-nine weeks ended May 29, 2021 excluded an immaterial number and 0.2 million shares, issuable upon exercise of stock options, respectively, that would have been anti-dilutive. Diluted earnings per share calculations for the thirteen and thirty-nine weeks ended May 30, 2020 excluded 0.8 million and 0.6 million shares, issuable upon exercise of stock options, respectively, that would have been anti-dilutive.

Diluted earnings per share calculations for the thirteen and thirty-nine weeks ended May 29, 2021 and the thirty-nine weeks ended May 30, 2020 excluded an immaterial number of non-vested shares that would have been anti-dilutive. Diluted earnings per share calculations for the thirteen weeks ended May 30, 2020 excluded 0.1 million non-vested shares that would have been anti-dilutive.