Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 01, 2023 | May 05, 2023 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Apr. 01, 2023 | |
Entity File Number | 001-40837 | |
Entity Registrant Name | Sovos Brands, Inc | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 81-5119352 | |
Entity Address State Or Province | CO | |
Entity Address, Address Line One | 168 Centennial Parkway | |
Entity Address, Address Line Two | Suite 200 | |
Entity Address, City or Town | Louisville | |
Entity Address, Postal Zip Code | 80027 | |
City Area Code | 720 | |
Local Phone Number | 316-1225 | |
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Trading Symbol | SOVO | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 101,226,478 | |
Entity Central Index Key | 0001856608 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 153,638 | $ 138,654 |
Accounts receivable, net | 93,447 | 87,695 |
Inventories, net | 86,727 | 92,602 |
Prepaid expenses and other current assets | 12,382 | 11,974 |
Total current assets | 346,194 | 330,925 |
Property and equipment, net | 63,275 | 64,317 |
Operating lease right-of-use assets | 12,724 | 13,332 |
Goodwill | 395,399 | 395,399 |
Intangible assets, net | 345,941 | 351,547 |
Other long-term assets | 2,485 | 3,279 |
TOTAL ASSETS | 1,166,018 | 1,158,799 |
CURRENT LIABILITIES: | ||
Accounts payable | 55,349 | 49,264 |
Accrued expenses | 57,679 | 69,571 |
Current portion of long-term debt | 94 | 99 |
Current portion of long-term operating lease liabilities | 3,365 | 3,308 |
Total current liabilities | 116,487 | 122,242 |
Long-term debt, net of debt issuance costs | 482,580 | 482,344 |
Deferred income taxes | 64,269 | 63,644 |
Long-term operating lease liabilities | 13,204 | 14,063 |
Other long-term liabilities | 517 | 483 |
TOTAL LIABILITIES | 677,057 | 682,776 |
COMMITMENTS AND CONTINGENCIES (Note 11) | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, $0.001 par value per share, 10,000,000 shares authorized, no shares issued and outstanding | ||
Common stock, $0.001 par value per share, 500,000,000 shares authorized, 101,226,478 and 100,967,910 shares issued and outstanding as of April 1, 2023 and December 31, 2022, respectively | 101 | 101 |
Additional paid-in-capital | 583,172 | 577,664 |
Accumulated deficit | (95,445) | (103,291) |
Accumulated other comprehensive income | 1,133 | 1,549 |
TOTAL STOCKHOLDERS' EQUITY | 488,961 | 476,023 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 1,166,018 | $ 1,158,799 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Apr. 01, 2023 | Dec. 31, 2022 | Sep. 26, 2021 | Sep. 23, 2021 |
Condensed Consolidated Balance Sheets | ||||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | |
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 | 10,000,000 | |
Preferred stock, issued (in shares) | 0 | 0 | ||
Preferred stock, outstanding (in shares) | 0 | 0 | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | |
Common stock, authorized (in shares) | 500,000,000 | 500,000,000 | 500,000,000 | |
Common stock, issued (in shares) | 101,226,478 | 100,967,910 | 74,058,447 | |
Common stock, outstanding (in shares) | 101,226,478 | 100,967,910 | 74,058,447 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Mar. 26, 2022 | |
Condensed Consolidated Statements of Operations | ||
Net sales | $ 252,791 | $ 209,933 |
Revenue, Product and Service [Extensible Enumeration] | us-gaap:ProductMember | us-gaap:ProductMember |
Cost of sales | $ 181,979 | $ 156,025 |
Cost, Product and Service [Extensible Enumeration] | us-gaap:ProductMember | us-gaap:ProductMember |
Gross profit | $ 70,812 | $ 53,908 |
Operating expenses: | ||
Selling, general and administrative | 43,414 | 33,915 |
Depreciation and amortization | 5,980 | 7,203 |
Total operating expenses | 49,394 | 41,118 |
Operating income | 21,418 | 12,790 |
Interest expense, net | 8,701 | 6,022 |
Income before income taxes | 12,717 | 6,768 |
Income tax (expense) | (4,871) | (2,711) |
Net income | $ 7,846 | $ 4,057 |
Earnings per share: | ||
Basic (in dollars per shares) | $ 0.08 | $ 0.04 |
Diluted (in dollars per shares) | $ 0.08 | $ 0.04 |
Weighted average shares outstanding: | ||
Basic (in shares) | 101,186,223 | 100,892,547 |
Diluted (in shares) | 101,507,696 | 101,262,103 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Mar. 26, 2022 | |
Condensed Consolidated Statements of Comprehensive Income | ||
Net income | $ 7,846 | $ 4,057 |
Other comprehensive income: | ||
Change in net unrealized loss on derivative instruments | (549) | |
Income tax effect | 133 | |
Unrealized loss on derivative instruments, net of tax | (416) | |
Total comprehensive income | $ 7,430 | $ 4,057 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income | Total |
Balances, at beginning of period at Dec. 25, 2021 | $ 101 | $ 559,226 | $ (49,840) | $ 509,487 | |
Balances, at beginning (in shares) at Dec. 25, 2021 | 100,892,547 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Equity-based compensation expense | 4,087 | 4,087 | |||
Net income | 4,057 | 4,057 | |||
Balances, at ending of period at Mar. 26, 2022 | $ 101 | 563,313 | (45,783) | 517,631 | |
Balances, at ending (in shares) at Mar. 26, 2022 | 100,892,547 | ||||
Balances, at beginning of period at Dec. 31, 2022 | $ 101 | 577,664 | (103,291) | $ 1,549 | 476,023 |
Balances, at beginning (in shares) at Dec. 31, 2022 | 100,967,910 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Equity-based compensation expense | 5,508 | 5,508 | |||
Shares issued upon vesting of restricted stock units (in shares) | 258,568 | ||||
Other comprehensive loss | (416) | (416) | |||
Net income | 7,846 | 7,846 | |||
Balances, at ending of period at Apr. 01, 2023 | $ 101 | $ 583,172 | $ (95,445) | $ 1,133 | $ 488,961 |
Balances, at ending (in shares) at Apr. 01, 2023 | 101,226,478 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Mar. 26, 2022 | |
Operating activities | ||
Net income | $ 7,846 | $ 4,057 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 8,469 | 9,555 |
Equity-based compensation expense | 5,508 | 4,087 |
Gain on foreign currency contracts | (133) | |
Non-cash interest expense | 164 | |
Deferred income taxes | 758 | 306 |
Amortization of debt issuance costs | 316 | 316 |
Non-cash operating lease expense | 608 | 603 |
Provision for excess and obsolete inventory | 836 | 484 |
Other | (6) | |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (5,752) | (12,065) |
Inventories, net | 5,039 | 1,275 |
Prepaid expenses and other current assets | (4,209) | (1,043) |
Other long-term assets | (45) | (10) |
Accounts payable | 6,437 | 4,896 |
Accrued expenses | (7,897) | (538) |
Other long-term liabilities | 34 | 10 |
Operating lease liabilities | (802) | (728) |
Net cash provided by operating activities | 17,177 | 11,199 |
Investing activities | ||
Purchases of property and equipment | (2,173) | (7,180) |
Net cash (used in) investing activities | (2,173) | (7,180) |
Financing activities | ||
Repayments of capital lease obligations | (20) | (24) |
Net cash (used in) financing activities | (20) | (24) |
Cash and cash equivalents | ||
Net increase in cash and cash equivalents | 14,984 | 3,995 |
Cash and cash equivalents at beginning of period | 138,654 | 66,154 |
Cash and cash equivalents at end of period | 153,638 | 70,149 |
Supplemental disclosures of cash flow information | ||
Cash paid for interest | 9,973 | 5,937 |
Cash proceeds from interest | (1,282) | (3) |
Cash paid for taxes | 140 | 37 |
Proceeds from income tax refunds | (43) | (10) |
Non-cash investing and financing transactions | ||
Acquisition of property and equipment not yet paid | $ 146 | $ 467 |
Company Overview
Company Overview | 3 Months Ended |
Apr. 01, 2023 | |
Company Overview | |
Company Overview | Note 1. Company Overview Description of Business Sovos Brands, Inc. and its wholly-owned subsidiaries (the “Company,” “Sovos Brands,” “we,” “us,” “our”) is a growth-oriented consumer-packaged food company with a portfolio of brands aimed at bringing today’s consumers great tasting food that fits the way they live. The Company’s four wholly-owned operating subsidiaries include: Rao’s Specialty Foods, Inc. (“Rao’s”); Bottom Line Food Processors, Inc. doing business as Michael Angelo’s Gourmet Foods, Inc. (“Michael Angelo’s”); Noosa Yoghurt, LLC (“Noosa”); and Aidaca, LLC. The Company’s principal products include a variety of pasta sauces, dry pasta, soups, frozen entrées Rao’s Michael Angelo’s noosa Through the end of fiscal 2022, the Company sold products marketed under the brand name of Birch Benders . Loss on Asset Sale Birch Benders Basis of Presentation The condensed consolidated financial statements include the accounts of the Company and its subsidiaries and have been prepared in conformity with United States Generally Accepted Accounting Principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). All intercompany balances and transactions have been eliminated. The condensed consolidated financial statements are presented in U.S. dollars. The Company maintains its accounting records on a 52/53-week fiscal year, ending on the last Saturday in December of each year. Unaudited Interim Condensed Consolidated Financial Statements The interim condensed consolidated financial statements and related notes of the Company and its subsidiaries are unaudited. The unaudited interim condensed consolidated financial statements reflect all adjustments and disclosures which are, in our opinion, necessary for a fair presentation of the results of operations, financial position and cash flows for the indicated periods. All such adjustments were of a normal and recurring nature. The year-end balance sheet data was derived from the audited financial statements and, in accordance with the instructions to Form 10-Q, certain information and footnote disclosures required by GAAP have been condensed or omitted. The results reported in these unaudited interim condensed consolidated financial statements are not necessarily indicative of the results that may be reported for the entire fiscal year and should be read in conjunction with our consolidated financial statements for the fiscal year ended December 31, 2022, included in our Annual Report on Form 10-K, filed with the SEC on March 8, 2023 (“2022 Form 10-K”). |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Apr. 01, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in Note 2. Summary of Significant Accounting Policies New Accounting Pronouncements and Policies Recently Issued Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments-Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures No other new accounting pronouncements issued or effective during the quarter had or is expected to have a material impact on the Company’s consolidated financial statements. |
Loss on Asset Sale
Loss on Asset Sale | 3 Months Ended |
Apr. 01, 2023 | |
Loss on Asset Sale | |
Loss on Asset Sale | Note On December 30, 2022, the Company completed the divestiture of the Birch Benders The divestiture of the Birch Benders For the fiscal year ended December 31, 2022, the Company recognized a pre-tax loss on the sale of Birch Benders (In thousands) Cash received $ 40,000 Assets sold: Inventory (5,424) Intangible assets, net (85,867) Total assets sold (91,291) Loss on asset sale $ (51,291) |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Apr. 01, 2023 | |
Revenue Recognition | |
Revenue Recognition | Note 4. Revenue Recognition Revenue disaggregated by brand is as follows: 13 Weeks Ended (In thousands) April 1, 2023 March 26, 2022 Rao’s $ 189,191 $ 137,412 Noosa 45,284 41,851 Michael Angelo’s 19,102 20,242 Birch Benders (786) 10,428 Total net sales $ 252,791 $ 209,933 The activity for Birch Benders |
Inventories, Net
Inventories, Net | 3 Months Ended |
Apr. 01, 2023 | |
Inventories, Net | |
Inventories, Net | Note 5. Inventories, Net Inventories, net consisted of the following: (In thousands) April 1, 2023 December 31, 2022 Finished goods $ 73,205 $ 76,404 Raw materials and packaging supplies 13,522 16,198 Total inventories, net $ 86,727 $ 92,602 |
Goodwill
Goodwill | 3 Months Ended |
Apr. 01, 2023 | |
Goodwill. | |
Goodwill | Note 6. Goodwill There were no changes in the carrying value or impairment charges related to goodwill during the 13 weeks ended April 1, 2023 and March 26, 2022. |
Intangible Assets, Net
Intangible Assets, Net | 3 Months Ended |
Apr. 01, 2023 | |
Intangible Assets, Net | |
Intangible Assets, Net | Note 7. Intangible Assets, Net Intangible asset, net, consisted of the following: April 1, 2023 Gross carrying Accumulated Net carrying (In thousands) amount amortization amount Intangible assets - definite lives Customer relationships $ 207,300 $ 92,979 $ 114,321 Tradename 101,747 23,127 78,620 309,047 116,106 192,941 Intangible assets - indefinite lives Tradename 153,000 — 153,000 Total intangible assets $ 462,047 $ 116,106 $ 345,941 December 31, 2022 Gross carrying Accumulated Sale of Net carrying (In thousands) amount amortization intangible assets amount Intangible assets - definite lives Customer relationships $ 213,000 $ 89,201 $ 5,082 $ 118,717 Tradename 192,347 31,732 80,785 79,830 405,347 120,933 85,867 198,547 Intangible assets - indefinite lives Tradename 153,000 — — 153,000 Total intangible assets $ 558,347 $ 120,933 $ 85,867 $ 351,547 In connection with the divestiture of the Birch Benders Loss on Asset Sale Amortization expense related to intangible assets during the 13 weeks ended April 1, 2023 and March 26, 2022 was $5.6 million and $6.8 million, respectively. There were no impairment charges related to intangible assets during the 13 weeks ended April 1, 2023 and March 26, 2022. Estimated total intangible amortization expense during the next five fiscal years and thereafter is as follows: (In thousands) Amortization Remainder of 2023 $ 16,819 2024 22,425 2025 22,425 2026 22,425 2027 17,782 Thereafter 91,065 Total $ 192,941 |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Apr. 01, 2023 | |
Accrued Expenses | |
Accrued Expenses | Note 8. Accrued Expenses Accrued expenses consisted of the following: (In thousands) April 1, 2023 December 31, 2022 Accrued trade $ 30,419 $ 32,337 Accrued general expense 17,784 17,911 Accrued compensation and benefits 8,412 17,328 Accrued marketing 1,064 1,995 Total accrued expenses $ 57,679 $ 69,571 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Apr. 01, 2023 | |
Long-Term Debt | |
Long-Term Debt | Note 9. Long-Term Debt Long-term debt consisted of the following: April 1, 2023 Unamortized debt issuance (In thousands) Principal costs Total debt, net Initial First Lien Term Loan Facility $ 480,800 $ (5,123) $ 475,677 Finance lease liabilities 6,997 — 6,997 Total debt $ 487,797 $ (5,123) 482,674 Less: current portion of finance lease liabilities 94 Total long-term debt $ 482,580 December 31, 2022 Unamortized debt issuance (In thousands) Principal costs Total debt, net Initial First Lien Term Loan Facility $ 480,800 $ (5,374) $ 475,426 Finance lease liabilities 7,017 — 7,017 Total debt $ 487,817 $ (5,374) 482,443 Less: current portion of finance lease liabilities 99 Total long-term debt $ 482,344 Senior Debt In June 2021, Sovos Brands Intermediate, Inc. (“Sovos Intermediate”) Sovos Intermediate The Initial First Lien Term Loan Facility was issued with a discount of $1.5 million and the Company paid debt issuance costs of $6.8 million. The discounts and debt issuance costs paid on the Initial First Lien Term Loan Facility were capitalized. The debt transaction on the Revolving Facility was accounted for as a debt modification. The Company continued to amortize $0.2 million of debt issuance costs on a previous Revolving Line of Credit over the new life of the debt, and paid $1.1 million in debt issuance costs for the new Revolving Facility, which was capitalized. In 2021, the Company prepaid $99.2 million of the outstanding principal balance under the Initial First Lien Term Loan Facility. Upon the partial prepayment of the Initial First Lien Term Loan Facility, the Company recognized a $1.4 million proportional loss on the partial extinguishment of the related unamortized issuance costs and discounts. The remaining principal balance on the Initial First Lien Term Loan Facility, after the $99.2 million prepayment, is $480.8 million. The Company has directed Credit Suisse to apply the prepayment against future scheduled principal installments, which eliminates all future principal payments for the remaining term of the loan. The amortization of debt issuance costs and discount of $0.3 million and $0.3 million for the 13 weeks ended April 1, 2023 and March 26, 2022, respectively, is included within interest expense, net in the Condensed Consolidated Statements of Operations. The interest rate for the Initial First Lien Term Loan Facility and Revolving Facility is London Inter-Bank Offered Rate (“LIBO Rate”) plus an applicable rate contingent on the Company’s calculated first lien leverage ratio, ranging from 400 to 425 basis points, and was subject to a 50 basis points reduction, at each level, after the consummation of its initial public offering ("IPO"). In no event shall the LIBO Rate be less than 0.75% per annum for the Initial First Lien Term Loan Facility or less than 0.00% per annum for the Revolving Line of Credit. The Initial First Lien Term Loan Facility matures on June 8, 2028 and the Revolving Facility matures on June 8, 2026. The Initial First Lien Term Loan Facility is collateralized by substantially all the assets of the Company. On December 30, 2022, Sovos Intermediate and Birch Benders, LLC, a Delaware limited liability company (renamed Aidaca, LLC), sold the Birch Benders The Company had available credit of $125.0 million under the Revolving Facility as of April 1, 2023 and December 31, 2022, respectively. There was zero outstanding on the Revolving Facility as of April 1, 2023 and December 31, 2022. As of April 1, 2023 and December 31, 2022, the effective interest rate for the Initial First Lien Term Loan Facility and Revolving Facility was 8.33% and 7.91%, respectively. Loan Covenants In connection with the First Lien Credit Agreement, the Company has various financial, affirmative and negative covenants that it must adhere to as specified within the loan agreements. The First Lien Credit Agreement contains a springing financial covenant, which requires the Borrower to maintain a first lien net leverage ratio of consolidated first lien net debt to consolidated EBITDA (with certain adjustments as set forth in the First Lien Credit Agreement) no greater than 6.95:1.00. Such financial covenant is tested only if outstanding revolving loans (excluding any undrawn letters of credit) minus unrestricted cash exceed 35% of the aggregate revolving credit commitments. The financial covenant is subject to customary “equity cure” rights. In addition, under the First Lien Credit Agreement, an annual excess cashflow calculation is required, to determine if any excess is required to be paid on the Initial First Lien Term Loan Facility. As of April 1, 2023, the Company had no outstanding revolving loans, so did not meet the requirement to test the financial covenant under the First Lien Credit Agreement. See Note 10. Leases Related Party Transactions |
Leases
Leases | 3 Months Ended |
Apr. 01, 2023 | |
Leases | |
Leases | Note 10. Leases The Company leases real estate in the form of distribution centers, manufacturing facilities, equipment and office space. Generally, the term for real estate leases ranges from 2 to 10 years at inception of the contract. Generally, the term for equipment leases is 5 years at inception of the contract. Most manufacturing facilities and office space leases include one or more options to renew, with renewal terms that generally can extend the lease term from 2 to 30 years. The exercise of lease renewal options is at the Company’s discretion. Operating and finance lease costs are included within Cost of sales and Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. Sublease income was not material for the periods presented. The components of lease expense were as follows: 13 Weeks Ended (In thousands) Statement of Operations Caption April 1, 2023 March 26, 2022 Operating lease cost: Lease cost Cost of sales and Selling, general and administrative $ 811 $ 840 Variable lease cost (1) Cost of sales and Selling, general and administrative 427 363 Total operating lease cost 1,238 1,203 Short term lease cost Cost of sales and Selling, general and administrative 35 46 Finance lease cost: Amortization of right-of-use assets Cost of sales and Selling, general and administrative 65 65 Interest on lease liabilities Interest expense, net 132 133 Total finance lease cost 197 198 Total lease cost $ 1,470 $ 1,447 (1) Variable lease cost primarily consists of common area maintenance, utilities, taxes and insurance. The gross amount of assets and liabilities related to both operating and finance leases were as follows: (In thousands) Balance Sheet Caption April 1, 2023 December 31, 2022 Assets Operating lease right-of-use assets Operating lease right-of-use assets $ 12,724 $ 13,332 Finance lease right-of-use assets Property and equipment, net 5,973 6,038 Total lease assets $ 18,697 $ 19,370 Liabilities Current: Operating lease liabilities Current portion of long-term operating lease liabilities $ 3,365 $ 3,308 Finance lease liabilities Current portion of long-term debt 94 99 Long-term: Operating lease liabilities Long-term operating lease liabilities 13,204 14,063 Finance lease liabilities Long-term debt, net of debt issuance costs 6,903 6,918 Total lease liabilities $ 23,566 $ 24,388 The weighted-average remaining lease term and weighted-average discount rate for operating and finance leases were as follows: April 1, 2023 December 31, 2022 Weighted-average remaining lease term (in years): Operating leases 6.3 6.4 Finance leases 34.1 34.2 Weighted-average discount rate Operating leases 5.0 % 4.9 % Finance leases 7.9 % 7.8 % Future maturities of lease liabilities as of April 1, 2023, were as follows: (In thousands) Operating Leases Finance Leases Fiscal year ending: Remainder of 2023 $ 3,058 $ 457 2024 3,493 557 2025 2,982 549 2026 3,005 520 2027 3,064 525 Thereafter 3,856 18,445 Total lease payments 19,458 21,053 Less: Interest (2,889) (14,056) Present value of lease liabilities $ 16,569 $ 6,997 As of April 1, 2023, the Company did not have any significant additional operating or finance leases that have not yet commenced. Supplemental cash flow and other information related to leases were as follows: 13 Weeks Ended (In thousands) April 1, 2023 March 26, 2022 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,004 $ 1,011 Operating cash flows from finance leases 132 133 Financing cash flows from finance leases 20 24 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Apr. 01, 2023 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note Litigation From time to time, we are subject to various legal actions arising in the ordinary course of our business. We cannot predict with reasonable assurance the outcome of these legal actions brought against us as they are subject to uncertainties. Accordingly, any settlement or resolution in these legal actions may occur and affect our net income in such period as the settlement or resolution. We do not believe the outcome of any existing legal actions would have a material adverse effect on our consolidated financial statements taken as a whole. Purchase Commitments The Company has third-party purchase obligations for raw materials, packaging, and co-manufacturing. These commitments have been entered into based on future projected needs. As of April 1, 2023, the Company had outstanding minimum purchase commitments with one supplier. The estimated annual minimum purchase commitments with the supplier are as follows: Fiscal Year Ending (In thousands) Remainder of 2023 $ 1,827 2024 3,500 2025 1,492 2026 — 2027 — Thereafter — Total $ 6,819 See Note 17. Related Party Transactions |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Apr. 01, 2023 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | Note 12. Fair Value of Financial Instruments ASC 820, Fair Value Measurements and Disclosures Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and Level 3: inputs for the asset or liability that are based on unobservable inputs in which there is little or no market data. Cash and cash equivalents, current assets and current liabilities Cash and cash equivalents, accounts receivable, prepaid expenses, accounts payable and accrued expenses are reflected in the Condensed Consolidated Balance Sheets at carrying value, which approximates fair value due to the short-term nature of these instruments. Borrowing instruments The Company’s borrowing instruments are recorded at their carrying values in the Condensed Consolidated Balance Sheets, which may differ from their respective fair values. The carrying values and estimated fair values of the Company’s Initial First Lien Term Loan Facility and Revolving Facility approximate their carrying values as of April 1, 2023 and December 31, 2022, based on interest rates currently available to the Company for similar borrowings. Derivative financial instruments The Company uses option contracts to manage foreign currency risk and uses interest rate caps (options) to manage interest rate risk. The Company’s derivative assets and liabilities are carried at fair value as required by GAAP. The estimated fair values of the derivative assets and liabilities on the Company’s forward contracts is based on foreign currency exchange rates in active markets. The estimated fair value of the interest rate instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. To comply with the provisions of ASC 820, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. We have determined that the significance of the impact of the credit valuation adjustments made to our derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of our derivatives held as of April 1, 2023 and December 31, 2022 were classified as Level 2 of the fair value hierarchy. The tables below present the Company’s assets and liabilities measured at fair value on a recurring basis aggregated by the level in the fair value hierarchy within which those measurements fall. As of April 1, 2023 Fair Value Measurements Using (In thousands) Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance at April 1, 2023 Assets Derivatives not designated as hedging instruments $ — $ 100 $ — $ 100 Derivatives in cash flow hedging relationships $ — $ 2,915 $ — $ 2,915 Total assets $ — $ 3,015 $ — $ 3,015 Liabilities Derivatives not designated as hedging instruments $ — $ — $ — $ — Total liabilities $ — $ — $ — $ — As of December 31, 2022 Fair Value Measurements Using (In thousands) Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance at December 31, 2022 Assets Derivatives in cash flow hedging relationships $ — $ 3,628 $ — $ 3,628 Total assets $ — $ 3,628 $ — $ 3,628 Liabilities Derivatives not designated as hedging instruments $ — $ 33 $ — $ 33 Total liabilities $ — $ 33 $ — $ 33 The fair value estimates presented herein are based on information available to management as of April 1, 2023. These estimates are not necessarily indicative of the amounts we could ultimately realize. See Note 13. Hedging and Derivative Financial Instruments Non-financial assets The Company’s non-financial assets, which primarily consist of property and equipment, right-of-use assets, goodwill and other intangible assets, are not required to be carried at fair value on a recurring basis and are reported at carrying value. The fair values of these assets are determined, as required, based on Level 3 measurements, including estimates of the amount and timing of future cash flows based upon historical experience, expected market conditions, and management’s plans. There were no transfers of financial instruments between the three levels of fair value hierarchy during the 13 weeks ended April 1, 2023 and the fiscal year ended December 31, 2022. |
Hedging and Derivative Financia
Hedging and Derivative Financial Instruments | 3 Months Ended |
Apr. 01, 2023 | |
Hedging and Derivative Financial Instruments | |
Hedging and Derivative Financial Instruments | Note 13. Hedging and Derivative Financial Instruments The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company’s financial performance and are referred to as “market risks.” When deemed appropriate, the Company uses derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary market risks managed by the Company through the use of derivative instruments are foreign currency exchange rate risk and interest rate risk. The Company uses various types of derivative instruments including, but not limited to, option contracts, collars and interest rate caps. An option contract is an agreement that conveys the purchaser the right, but not the obligation, to buy or sell a quantity of a currency or commodity at a predetermined rate or price during a period or at a time in the future. A collar is a strategy that uses a combination of options to limit the range of possible positive or negative returns on an underlying asset or liability to a specific range, or to protect expected future cash flows. To do this, an investor simultaneously buys a put option and sells (writes) a call option, or alternatively buys a call option and sells (writes) a put option. An interest rate cap involves the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. We do not enter into derivative financial instruments for trading purposes. All derivative instruments are carried at fair value in the Condensed Consolidated Balance Sheets, primarily in the following line items, as applicable: prepaid expenses and other current assets, other long-term assets and accrued expenses. The carrying values of the derivatives reflect the impact of netting agreements. These netting agreements allow the Company to net settle positive and negative positions (assets and liabilities) arising from different transactions with the same counterparty. The accounting for gains and losses that result from changes in the fair values of derivative instruments depends on whether the derivatives have been designated and qualify as hedging instruments and the type of hedging relationships. Derivatives can be designated as fair value hedges, cash flow hedges or economic hedges. The interest rate cap derivative is designated and qualifies as a cash flow hedge. The foreign currency derivative instruments are considered an economic hedge as they do not qualify for hedge accounting treatment. The Company determines the fair values of its derivatives based on quoted market prices or pricing models using current market rates. The notional amounts of the derivative financial instruments do not necessarily represent amounts exchanged by the parties and, therefore, are not a direct measure of our exposure to the financial risks described above. The amounts exchanged are calculated by reference to the notional amounts and by other terms of the derivatives, such as interest rates or foreign currency exchange rates. The Company does not view the fair values of its derivatives in isolation but rather in relation to the fair values or cash flows of the underlying hedged transactions or other exposures. Virtually all our derivatives are straightforward over-the-counter instruments with liquid markets. See Note 12. Fair Value of Financial Instruments Cash Flow Hedges of Interest Rate Risk The Company’s objectives in using interest rate derivatives are to add stability to interest expense and manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate caps as part of its interest rate risk management strategy. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. During the 13 weeks ended April 1, 2023, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in other comprehensive income (“OCI”) in the Condensed Consolidated Statements of Other Comprehensive Income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in OCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. Over the next 12 months, the Company estimates that an additional $0.9 million will be reclassified as a reduction to interest expense. During the fiscal year ended December 31, 2022, the Company entered into a cash flow hedge to manage interest rate risk on its variable rate debt under the Initial First Lien Term Loan Facility. As of April 1, 2023, the Company had one LIBOR interest rate cap agreement (the “LIBOR Cap Agreement”) with a total hedged notional amount of $240.0 million that was designated as a cash flow hedge of interest rate risk. The LIBOR Cap Agreement has a strike price of 4.00% and a maturity date of July 31, 2024. The LIBOR Cap Agreement is designated for cash flow hedge accounting with all changes in fair value deferred into accumulated OCI. Within the Company’s Condensed Consolidated Balance Sheets, the interest rate cap is recorded at fair value. The cash flows related to the interest rate caps are classified as operating activities in the Condensed Consolidated Statements of Cash Flows. Foreign Currency Hedge During the 13 weeks ended April 1, 2023, the Company entered into a foreign currency hedge to offset the earnings impact of foreign currency exchange rates through the end of fiscal 2023. Economic (Non-Designated) Hedging Strategy The Company uses certain derivatives as economic hedges of foreign currency. Although these derivatives did not qualify for hedge accounting, they are effective economic hedges. The Company uses foreign currency economic hedges to offset the earnings impact that fluctuations in foreign currency exchange rates have on certain monetary assets and liabilities denominated in nonfunctional currencies outside of a contractually agreed upon foreign exchange rate range. The total notional values of derivatives related to our foreign currency economic hedges were $270.9 million and $145.7 million as of April 1, 2023 and December 31, 2022, respectively. The changes in the fair values of economic hedges used to offset those monetary assets and liabilities are immediately recognized in earnings in the selling, general and administrative line item in our Condensed Consolidated Statements of Operations. Within the Company’s Condensed Consolidated Balance Sheets, the foreign currency economic hedges are recorded at fair value. The cash flows related to the foreign currency economic hedges are classified as operating activities in the Condensed Consolidated Statements of Cash Flows. The following table presents the fair values of the Company’s derivative instruments: April 1, 2023 December 31, 2022 (In thousands) Location Derivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities Derivatives not designated as hedging instruments under Subtopic 815-20 Foreign currency contracts (1) Prepaid expenses and other current assets $ 100 $ — $ — $ — Foreign currency contracts (1) Accrued expenses — — 33 Total derivatives not designated as hedging instruments $ 100 $ — $ — $ 33 Derivatives designated as hedging instruments under Subtopic 815-20 Interest rate caps - short term Prepaid expenses and other current assets $ 2,059 $ — $ 1,997 $ — Interest rate caps - long term Other long-term assets 856 — 1,631 — Total derivatives designated as hedging instruments $ 2,915 $ — $ 3,628 $ — Total derivatives $ 3,015 $ — $ 3,628 $ 33 (1) Derivative instruments within this category are subject to master netting arrangements and are presented on a net basis in the Condensed Consolidated Balance Sheets in accordance with ASC 210, Balance Sheet, Subtopic 210-20. See tables below showing the effects of offsetting derivative assets and liabilities. The following table presents the pre-tax effect of cash flow hedge accounting on accumulated OCI for the periods presented: (In thousands) Amount of Gain or (Loss) Recognized in OCI 13 Weeks Ended Derivatives in Subtopic 815-20 Hedging Relationships April 1, 2023 March 26, 2022 Derivatives in cash flow hedging relationships Interest rate caps $ (294) $ — (In thousands) Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income 13 Weeks Ended Location of Gain or (Loss) Reclassified from Accumulated OCI into Income April 1, 2023 March 26, 2022 Derivatives in cash flow hedging relationships Interest expense, net $ 254 $ — The following table presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations for the periods presented: Gain (Loss) Recognized 13 Weeks Ended April 1, March 26, (In thousands) Statement of Operations Location 2023 2022 Total amounts of expense presented in the Statements of Operations in which the derivatives not designated as hedging are recorded Selling, general and administrative $ 43,414 $ 33,915 The effects of derivatives not designated as hedging instruments under Subtopic 815-20: Foreign currency contracts Selling, general and administrative 100 — Total amounts of expense presented in the Statements of Operations in which the derivatives designated as hedging are recorded Interest expense, net 8,701 6,022 The effects of derivatives designated as hedging instruments under Subtopic 815-20: Interest rate caps Interest expense, net 254 — The net amounts of derivative assets or liabilities in the tables below can be reconciled to the tabular disclosure of fair value which provides the location that derivative assets and liabilities are presented on the Condensed Consolidated Balance Sheets. The following tables present a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of April 1, 2023 and December 31, 2022. Offsetting of Derivative Assets As of April 1, 2023 Gross Amounts Not Offset in the Balance Sheet (In thousands) Gross Amounts of Recognized Assets Gross Amounts Offset in the Balance Sheet Net Amounts of Assets Presented in the Balance Sheet Financial Instruments Cash Collateral Posted Gross Amounts of Recognized Assets Derivatives Foreign currency contracts $ 620 $ (520) $ 100 $ — $ — $ 100 Total derivatives, subject to a master netting arrangement 620 (520) 100 — — 100 Total derivatives, not subject to a master netting arrangement 2,915 — 2,915 — — 2,915 Total derivatives $ 3,535 $ (520) $ 3,015 $ — $ — $ 3,015 Offsetting of Derivative Liabilities As of April 1, 2023 Gross Amounts Not Offset in the Balance Sheet (In thousands) Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Balance Sheet Net Amounts of Liabilities Presented in the Balance Sheet ' Financial Instruments Cash Collateral Posted Net Amount Derivatives Foreign currency contracts $ (520) $ 520 $ $ — $ — $ Total derivatives, subject to a master netting arrangement (520) 520 — — — — Total derivatives, not subject to a master netting arrangement — — — — — — Total derivatives $ (520) $ 520 $ - $ — $ — $ - Offsetting of Derivative Assets As of December 31, 2022 Gross Amounts Not Offset in the Balance Sheet (In thousands) Gross Amounts of Recognized Assets Gross Amounts Offset in the Balance Sheet Net Amounts of Assets Presented in the Balance Sheet Financial Instruments Cash Collateral Posted Gross Amounts of Recognized Assets Derivatives Foreign currency contracts $ 56 $ (56) $ — $ — $ — $ — Total derivatives, subject to a master netting arrangement 56 (56) — — — — Total derivatives, not subject to a master netting arrangement 3,628 — — — — 3,628 Total derivatives $ 3,684 $ (56) $ — $ — $ — $ 3,628 Offsetting of Derivative Liabilities As of December 31, 2022 Gross Amounts Not Offset in the Balance Sheet (In thousands) Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Balance Sheet Net Amounts of Liabilities Presented in the Balance Sheet Financial Instruments Cash Collateral Posted Net Amount Derivatives Foreign currency contracts $ (89) $ 56 $ (33) $ — $ — $ (33) Total derivatives, subject to a master netting arrangement (89) 56 (33) — — (33) Total derivatives, not subject to a master netting arrangement — — — — — — Total derivatives $ (89) $ 56 $ (33) $ — $ — $ (33) |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Apr. 01, 2023 | |
Stockholders' Equity | |
Stockholders' Equity | Note 14. Stockholders’ Equity Common Stock Prior to the IPO, the Company had a total of 74,058,447 shares issued and outstanding . On September 27, 2021, the Company closed its IPO of 23,334,000 shares of common stock, $0.001 par value per share, at an offering price of $12.00 per share, and received net proceeds from the IPO of approximately $263.2 million, net of $16.8 million in underwriting discounts and commissions. Subsequent to the IPO, the underwriters exercised their option to purchase an additional 3,500,100 shares of common stock. The Company closed its sale of such additional shares on October 5, 2021, resulting in net proceeds of approximately $39.5 million, net of $2.5 million in underwriting discounts and commissions. On August 10, 2022, the Company completed a secondary offering, in which certain of its stockholders (the “Selling Stockholders”) sold 8,500,000 shares of common stock in an underwritten public offering at an offering price of $14.00 per share, with all proceeds going to the Selling Stockholders. Subsequent to the secondary offering, the underwriters exercised their option to purchase an additional 1,275,000 shares of common stock, and the sale of such additional shares closed on August 22, 2022, with all proceeds going to the Selling Stockholders. Preferred Stock On September 23, 2021, the Company filed an amended and restated certificate of incorporation (“Amended and Restated Charter”) with the Secretary of State of the State of Delaware, which was effective on September 23, 2021 . As a result of the filing of the Amended and Restated Charter, the Company was authorized to issue 510,000,000 shares, divided into two classes as follows: (i) 500,000,000 shares are designated shares of common stock, par value $0.001 per share, and (ii) 10,000,000 shares are designated shares of preferred stock, par value $0.001 per share. There were no shares of preferred stock issued and outstanding as of April 1, 2023 and December 31, 2022. |
Equity-Based Compensation
Equity-Based Compensation | 3 Months Ended |
Apr. 01, 2023 | |
Equity-Based Compensation. | |
Equity-Based Compensation | Note 15. Equity-Based Compensation 2017 Equity Incentive Plan In 2017, the Sovos Brands Limited Partnership (the “Limited Partnership”) 2017 Equity Incentive Plan (“2017 Plan”) was established providing certain employees and nonemployees of the Company equity-based compensation in the form of Incentive Units (“IUs”) of the Limited Partnership, as consideration for services to the Company. The IUs, were deemed to be equity instruments subject to expense recognition under FASB ASC 718, Compensation — Stock Compensation. The estimate of fair value of the IUs granted was determined as of the grant date. In connection with the IPO, the Limited Partnership distributed its shares of Sovos Brands, Inc. common stock to its limited partners, including holders of IUs, in accordance with the applicable terms of its partnership agreement. Holders of IUs received shares of common stock and restricted common stock of Sovos Brands, Inc. in respect of their IUs. The common stock was distributed with respect to vested IUs and the restricted common stock was distributed with respect to nonvested IUs, with the vesting of such restricted common stock tracking the same vesting terms as the related nonvested IUs at the time of distribution. Restricted Common Stock In connection with the IPO, a change in the vesting of the existing performance-based IUs and accordingly the related distributed restricted stock resulted in a modification to the grants and required the shares to be revalued as of the IPO date, resulting in a modified grant date fair value of approximately $13.0 million. The fair value of the performance-based restricted stock awards was calculated using a Monte Carlo simulation option pricing model estimates and assumptions, such as expected volatility, expected term and expected risk-free interest rate. Specifically, the model revalued the performance units based on the 2.0 multiple of invested capital (“MOIC”) 2.0 2.0 On November 4, 2021, the Company and the Limited Partnership modified a portion of the existing equity-based compensation awards dated September 22, 2021 among the Company, the Limited Partnership and the holders of such restricted stock. As a result of this modification, a portion of the shares that would have vested based upon a 4.0 The fair value of the modified performance-based restricted stock awards was calculated using a Monte Carlo simulation option pricing model estimates and assumptions, such as expected volatility, expected term and expected risk-free interest rate, resulting in an incremental modified grant date fair value of approximately $6.1 million. On February 10, 2023, the Company and the Limited Partnership modified a portion of the existing equity-based compensation awards dated September 22, 2021 among the Company, Limited Partnership and the holders of such restricted stock. As a result of these modifications, a portion of the shares that would have vested based upon a 3.0 MOIC or a 4.0 MOIC (including any related linear interpolation, the “Original Vesting Criteria”) instead vest 50% on September 23, 2024 and 50% on September 23, 2025, or upon achievement of the Original Vesting Criteria, if earlier. The fair value of the modified performance-based restricted stock awards was calculated using a Monte Carlo simulation option pricing model which requires the Company to make estimates and assumptions, such as expected volatility, expected term and expected risk-free interest rate, resulting in an incremental modified grant date fair value of approximately $5.5 million. As of April 1, 2023, 5,563 shares of restricted common stock resulting from the distribution of common stock with respect to nonvested time-based IUs vest upon fulfilling time-based service conditions and are scheduled to vest through 2024. As of April 1, 2023, there were 2,348,879 shares of restricted common stock resulting from the distribution with respect to nonvested performance-based IUs, of which 169,698 shares will vest on the earlier of December 30, 2023 or when the original performance condition is achieved, 509,210 shares will vest on the earlier of when the original performance condition is achieved or 50% on September 23, 2024 and 50% on September 23, 2025 and the remaining 1,669,971 shares will vest only if certain performance conditions, including exceeding various levels, are achieved. S to the Limited Partnership. 2021 Equity Incentive Plan Effective September 21, 2021, the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”) which reserves 9,739,244 shares of common stock to grant stock options, stock appreciation rights, restricted stock awards, restricted stock units or equity-based awards to eligible employees, consultants and directors. Restricted Stock Units During the 13 weeks ended March 26, 2022, the Company granted 561,355 RSUs to certain employees. The RSUs included (i) 485,316 RSUs issued with each award vesting in two equal annual installments, and (ii) 76,039 RSUs issued to an employee vesting in three equal annual installments, all of which are subject in general to the employee’s continued service through the vesting date. During the 13 weeks ended April 1, 2023, the Company granted 418,136 RSUs to certain employees. The RSUs included (i) 323,172 RSUs issued to employees with each award vesting in two equal annual installments and (ii) 94,964 RSUs issued to an employee vesting in three equal annual installments, all of which are subject in general to the employee’s continued service through the vesting date. Performance-based Restricted Stock Units In connection with the IPO and under the 2021 Plan, the Company granted 687,690 performance-based restricted stock units (“PSUs”) to certain employees with each award vesting subject in general to the achievement of the performance condition and subject in general to the employee’s continued service through the vesting date. The fair value of the PSUs was estimated using a Monte Carlo simulation option pricing model, which requires the Company to make estimates and assumptions, such as expected volatility, expected term and expected risk-free interest rate. On February 10, 2023, the Company modified the IPO PSUs dated September 23, 2021. As a result of this modification, the shares that would have vested based upon the achievement of a performance condition that measures the Total Shareholder Return (“TSR”) (the “Original Vesting Criteria”) instead vest 50% on September 23, 2024 and 50% on September 23, 2025, or upon achievement of the Original Vesting Criteria, if earlier. The fair value of the modified PSUs was calculated using a Monte Carlo simulation option pricing model which requires the Company to make estimates and assumptions, such as expected volatility, expected term and expected risk-free interest rate, resulting in an incremental modified grant date fair value of approximately $4.3 million. During the 13 weeks ended April 1, 2023 and March 26, 2022, the Company granted 429,082 PSUs and 343,800 PSUs, respectively, to employees with each award vesting subject in general to the achievement of a performance condition that measures the TSR relative to the TSR of the constituents of a custom peer group (“relative TSR”). The number of shares that may be earned ranges from 0% to 200%, with 100% vesting upon achievement of target performance, with straight-line interpolation applied and subject in general to the employee’s continued service through the vesting date. The fair value of the PSUs granted during the 13 weeks ended April 1, 2023 was estimated using a Monte Carlo simulation option pricing model, which requires the Company to make estimates and assumptions, such as expected volatility, expected term and expected risk-free interest rate. As of April 1, 2023, there was an aggregate of 6,286,912 shares of common stock available for future equity awards under the 2021 Plan (treating PSUs that vest based on relative TSR at the 100% target level). Equity-based Compensation Expense The Company grants equity-based compensation awards to certain employees, officers and non-employee directors as long-term incentive compensation and recognizes the related expense for these awards ratably over the applicable vesting period. Such expense is recognized as a selling, general and administrative expense in the Condensed Consolidated Statements of Operations. The following table summarizes the equity-based compensation expense recognized for the Company’s equity plans: Fiscal Year Ended (In thousands) April 1, 2023 March 26, 2022 Equity awards under the 2017 Plan (Pre-IPO) RSAs $ 138 $ 356 PSAs 1,607 1,561 Total equity-based compensation expense for the 2017 Plan 1,745 1,917 Equity awards under the 2021 Plan (Post-IPO) RSUs 2,886 1,480 PSUs 877 690 Total equity-based compensation expense for the 2021 Plan 3,763 2,170 Total equity-based compensation expense $ 5,508 $ 4,087 The Company expects to record equity-based compensation expense of approximately $43.8 million through the first quarter of 2026 resulting from the issuance of the RSAs and PSAs under the 2017 Plan and RSUs and PSUs under the 2021 Plan. |
Income Taxes
Income Taxes | 3 Months Ended |
Apr. 01, 2023 | |
Income Taxes | |
Income Taxes | Note 16. Income Taxes The income tax (expense) and the effective tax rate resulting from operations were as follows: 13 Weeks Ended (In thousands) April 1, 2023 March 26, 2022 Income before income taxes $ 12,717 $ 6,768 Effective income tax (expense) $ (4,871) $ (2,711) Effective tax rate 38.3 % 40.0 % The effective tax rates for the 13 weeks ended April 1, 2023 and March 26, 2022 differ from the U.S. federal statutory income tax rate of 21% primarily due to changes in earnings, permanent items including limitation on the deduction of executive compensation for public companies and nondeductible equity-based compensation, state taxes and various discrete items. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Apr. 01, 2023 | |
Related Party Transactions | |
Related Party Transactions | Note 17. Related Party Transactions The Company has two related party leases for a manufacturing facility and land. The facility and land are leased from Morning Fresh Dairy (“Morning Fresh”), a related party entity owned and controlled by a board member and equity holder of the Company. The facility lease and land lease are classified as a finance lease and operating lease, respectively, based on the original lease term and reasonably certain renewal options. As of April 1, 2023, the facility has a lease liability balance of $6.8 million which is primarily recognized as long-term debt in our Condensed Consolidated Balance Sheets. As of April 1, 2023, the land lease has a liability balance of $0.5 million which is primarily recognized as long-term operating lease liabilities in our Condensed Consolidated Balance Sheets. The facility and land lease contained total payments of approximately $145 thousand and $142 thousand for the 13 weeks ended April 1, 2023 and March 26, 2022, respectively. In addition, $45 thousand and $46 thousand was paid for the 13 weeks ended April 1, 2023 and March 26, 2022, respectively, for a proportionate share of utilities, taxes and insurance. Morning Fresh regularly purchases finished goods inventory from the Company for sale to its customers. Additionally, Morning Fresh regularly supplies milk used in the Company’s manufacturing process. Sales to and purchases from Morning Fresh were as follows: 13 Weeks Ended (In thousands) April 1, 2023 March 26, 2022 Sales $ 113 $ 117 Purchases $ 1,920 $ 1,970 Amounts outstanding in respect to Morning Fresh transactions were as follows: (In thousands) April 1, 2023 December 31, 2022 Receivables $ 21 $ 29 Payables $ — $ 870 The Company has a milk supply agreement with Morning Fresh (“Milk Supply Agreement”) for a base term ending December 31, 2027, with the option available for extension for a total of fifteen additional 2-year of the milk shall be 23.24 cents per hundred weight less than the published Dairy Farmers of America bill for that month. The Company will accept up to 3,650,000 gallons as determined by Morning Fresh in 2020, and for each year of the term thereafter. As of April 1, 2023, the Company has future commitments to purchase approximately $37.8 million of milk from Morning Fresh, approximated at current market price. In addition, under the Milk Supply Agreement, the Company has agreed to pay an additional $33 thousand monthly through December 31, 2027 to cover the landowner’s incremental costs relating to capital improvements necessary to support increased milk production required by the Company over the term of this agreement. If the agreement is terminated before December 1, 2027, the Company will be required to pay an early termination penalty, which declines from $3.0 million at the inception of the agreement to $0 over the ten-year term, based on an amortization table outlined in the agreement. As of April 1, 2023, the estimated annual minimum purchase commitments with Morning Fresh are as follows: Fiscal Year Ending (In thousands) Remainder of 2023 $ 6,228 2024 8,375 2025 8,375 2026 8,375 2027 8,375 Thereafter — Total $ 39,728 Advent International Corporation (“Advent”) is a private equity firm which has invested funds in our common stock. Although no individual fund owns a controlling interest in us, together the funds represent our current majority owners. Advent and its affiliates have ownership interests in a broad range of companies. We have entered and may in the future enter into commercial transactions in the ordinary course of our business with some of these companies, including the sale of goods and services and the purchase of goods and services. The Company pays legal expenses and tax compliance fees on behalf of the Limited Partnership and carries a balance within other long-term assets that reflects the amount due from the Limited Partnership. As of April 1, 2023 and December 31, 2022, the receivable balance was $0.1 million and $0.1 million, respectively. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Apr. 01, 2023 | |
Earnings Per Share | |
Earnings (Loss) Per Share | Note 18. Earnings Per Share Basic earnings per share (“EPS”) is calculated by dividing net income for the period by the weighted-average number of common shares outstanding for the period without consideration of potential common shares. Diluted EPS is calculated using the weighted average number of common shares outstanding including the dilutive effect of equity awards as determined under the treasury stock method. In periods when the Company has a net loss, equity awards are excluded from the calculation of diluted EPS as their inclusion would have an anti-dilutive effect. The following table presents the computation of EPS for the 13 weeks ended April 1, 2023 and March 26, 2022. 13 Weeks Ended (In thousands, except share and per share amounts) April 1, 2023 March 26, 2022 Net income $ 7,846 $ 4,057 Weighted average basic common shares outstanding 101,186,223 100,892,547 Effect of dilutive securities: Restricted stock units 190,602 369,556 Performance stock units 130,871 — Total 321,473 369,556 Weighted average and potential dilutive common shares outstanding 101,507,696 101,262,103 Earnings per share Basic $ 0.08 $ 0.04 Diluted $ 0.08 $ 0.04 For the 13 weeks ended April 1, 2023, 429,082 PSUs were outstanding, but were excluded in the computation of diluted EPS because these PSUs were considered to be anti-dilutive based on the result of the treasury stock method calculation for incremental shares. For the 13 weeks ended March 26, 2022, there were no anti-dilutive shares excluded from the computation of diluted EPS. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Apr. 01, 2023 | |
Summary of Significant Accounting Policies | |
New Accounting Pronouncements and Policies | New Accounting Pronouncements and Policies Recently Issued Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments-Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures No other new accounting pronouncements issued or effective during the quarter had or is expected to have a material impact on the Company’s consolidated financial statements. |
Loss on Asset Sale (Tables)
Loss on Asset Sale (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Loss on Asset Sale | |
Schedule of pre-tax loss on the sale of assets | For the fiscal year ended December 31, 2022, the Company recognized a pre-tax loss on the sale of Birch Benders (In thousands) Cash received $ 40,000 Assets sold: Inventory (5,424) Intangible assets, net (85,867) Total assets sold (91,291) Loss on asset sale $ (51,291) |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Revenue Recognition | |
Schedule of revenue disaggregated | 13 Weeks Ended (In thousands) April 1, 2023 March 26, 2022 Rao’s $ 189,191 $ 137,412 Noosa 45,284 41,851 Michael Angelo’s 19,102 20,242 Birch Benders (786) 10,428 Total net sales $ 252,791 $ 209,933 |
Inventories, Net (Tables)
Inventories, Net (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Inventories, Net | |
Schedule of inventories | (In thousands) April 1, 2023 December 31, 2022 Finished goods $ 73,205 $ 76,404 Raw materials and packaging supplies 13,522 16,198 Total inventories, net $ 86,727 $ 92,602 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Intangible Assets, Net | |
Schedule of intangible assets net | April 1, 2023 Gross carrying Accumulated Net carrying (In thousands) amount amortization amount Intangible assets - definite lives Customer relationships $ 207,300 $ 92,979 $ 114,321 Tradename 101,747 23,127 78,620 309,047 116,106 192,941 Intangible assets - indefinite lives Tradename 153,000 — 153,000 Total intangible assets $ 462,047 $ 116,106 $ 345,941 December 31, 2022 Gross carrying Accumulated Sale of Net carrying (In thousands) amount amortization intangible assets amount Intangible assets - definite lives Customer relationships $ 213,000 $ 89,201 $ 5,082 $ 118,717 Tradename 192,347 31,732 80,785 79,830 405,347 120,933 85,867 198,547 Intangible assets - indefinite lives Tradename 153,000 — — 153,000 Total intangible assets $ 558,347 $ 120,933 $ 85,867 $ 351,547 |
Schedule of amortization expenses intangible assets net | (In thousands) Amortization Remainder of 2023 $ 16,819 2024 22,425 2025 22,425 2026 22,425 2027 17,782 Thereafter 91,065 Total $ 192,941 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Accrued Expenses | |
Schedule of Accrued Expenses | (In thousands) April 1, 2023 December 31, 2022 Accrued trade $ 30,419 $ 32,337 Accrued general expense 17,784 17,911 Accrued compensation and benefits 8,412 17,328 Accrued marketing 1,064 1,995 Total accrued expenses $ 57,679 $ 69,571 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Long-Term Debt | |
Schedule of Long-term debt | April 1, 2023 Unamortized debt issuance (In thousands) Principal costs Total debt, net Initial First Lien Term Loan Facility $ 480,800 $ (5,123) $ 475,677 Finance lease liabilities 6,997 — 6,997 Total debt $ 487,797 $ (5,123) 482,674 Less: current portion of finance lease liabilities 94 Total long-term debt $ 482,580 December 31, 2022 Unamortized debt issuance (In thousands) Principal costs Total debt, net Initial First Lien Term Loan Facility $ 480,800 $ (5,374) $ 475,426 Finance lease liabilities 7,017 — 7,017 Total debt $ 487,817 $ (5,374) 482,443 Less: current portion of finance lease liabilities 99 Total long-term debt $ 482,344 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Leases | |
Schedule of components of lease expenses | 13 Weeks Ended (In thousands) Statement of Operations Caption April 1, 2023 March 26, 2022 Operating lease cost: Lease cost Cost of sales and Selling, general and administrative $ 811 $ 840 Variable lease cost (1) Cost of sales and Selling, general and administrative 427 363 Total operating lease cost 1,238 1,203 Short term lease cost Cost of sales and Selling, general and administrative 35 46 Finance lease cost: Amortization of right-of-use assets Cost of sales and Selling, general and administrative 65 65 Interest on lease liabilities Interest expense, net 132 133 Total finance lease cost 197 198 Total lease cost $ 1,470 $ 1,447 (1) Variable lease cost primarily consists of common area maintenance, utilities, taxes and insurance. |
Schedule of assets and liabilities related to both operating and finance leases | (In thousands) Balance Sheet Caption April 1, 2023 December 31, 2022 Assets Operating lease right-of-use assets Operating lease right-of-use assets $ 12,724 $ 13,332 Finance lease right-of-use assets Property and equipment, net 5,973 6,038 Total lease assets $ 18,697 $ 19,370 Liabilities Current: Operating lease liabilities Current portion of long-term operating lease liabilities $ 3,365 $ 3,308 Finance lease liabilities Current portion of long-term debt 94 99 Long-term: Operating lease liabilities Long-term operating lease liabilities 13,204 14,063 Finance lease liabilities Long-term debt, net of debt issuance costs 6,903 6,918 Total lease liabilities $ 23,566 $ 24,388 |
Schedule of weighted-average remaining lease term and weighted-average discount rate for operating and finance leases | April 1, 2023 December 31, 2022 Weighted-average remaining lease term (in years): Operating leases 6.3 6.4 Finance leases 34.1 34.2 Weighted-average discount rate Operating leases 5.0 % 4.9 % Finance leases 7.9 % 7.8 % |
Schedule of Future minimum lease payments of operating leases | Future maturities of lease liabilities as of April 1, 2023, were as follows: (In thousands) Operating Leases Finance Leases Fiscal year ending: Remainder of 2023 $ 3,058 $ 457 2024 3,493 557 2025 2,982 549 2026 3,005 520 2027 3,064 525 Thereafter 3,856 18,445 Total lease payments 19,458 21,053 Less: Interest (2,889) (14,056) Present value of lease liabilities $ 16,569 $ 6,997 |
Schedule of Future minimum lease payments of finance leases | (In thousands) Operating Leases Finance Leases Fiscal year ending: Remainder of 2023 $ 3,058 $ 457 2024 3,493 557 2025 2,982 549 2026 3,005 520 2027 3,064 525 Thereafter 3,856 18,445 Total lease payments 19,458 21,053 Less: Interest (2,889) (14,056) Present value of lease liabilities $ 16,569 $ 6,997 |
Schedule of supplemental cash flow and other information related to leases | 13 Weeks Ended (In thousands) April 1, 2023 March 26, 2022 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,004 $ 1,011 Operating cash flows from finance leases 132 133 Financing cash flows from finance leases 20 24 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Commitments and Contingencies. | |
Schedule of estimated annual minimum purchase commitments with suppliers | Fiscal Year Ending (In thousands) Remainder of 2023 $ 1,827 2024 3,500 2025 1,492 2026 — 2027 — Thereafter — Total $ 6,819 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Fair Value of Financial Instruments | |
Schedule of assets and liabilities measured at fair value on a recurring basis | As of April 1, 2023 Fair Value Measurements Using (In thousands) Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance at April 1, 2023 Assets Derivatives not designated as hedging instruments $ — $ 100 $ — $ 100 Derivatives in cash flow hedging relationships $ — $ 2,915 $ — $ 2,915 Total assets $ — $ 3,015 $ — $ 3,015 Liabilities Derivatives not designated as hedging instruments $ — $ — $ — $ — Total liabilities $ — $ — $ — $ — As of December 31, 2022 Fair Value Measurements Using (In thousands) Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance at December 31, 2022 Assets Derivatives in cash flow hedging relationships $ — $ 3,628 $ — $ 3,628 Total assets $ — $ 3,628 $ — $ 3,628 Liabilities Derivatives not designated as hedging instruments $ — $ 33 $ — $ 33 Total liabilities $ — $ 33 $ — $ 33 |
Hedging and Derivative Financ_2
Hedging and Derivative Financial Instruments (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Hedging and Derivative Financial Instruments | |
Schedule of fair values derivative instruments | The following table presents the fair values of the Company’s derivative instruments: April 1, 2023 December 31, 2022 (In thousands) Location Derivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities Derivatives not designated as hedging instruments under Subtopic 815-20 Foreign currency contracts (1) Prepaid expenses and other current assets $ 100 $ — $ — $ — Foreign currency contracts (1) Accrued expenses — — 33 Total derivatives not designated as hedging instruments $ 100 $ — $ — $ 33 Derivatives designated as hedging instruments under Subtopic 815-20 Interest rate caps - short term Prepaid expenses and other current assets $ 2,059 $ — $ 1,997 $ — Interest rate caps - long term Other long-term assets 856 — 1,631 — Total derivatives designated as hedging instruments $ 2,915 $ — $ 3,628 $ — Total derivatives $ 3,015 $ — $ 3,628 $ 33 (1) Derivative instruments within this category are subject to master netting arrangements and are presented on a net basis in the Condensed Consolidated Balance Sheets in accordance with ASC 210, Balance Sheet, Subtopic 210-20. See tables below showing the effects of offsetting derivative assets and liabilities. |
Schedule of pre-tax effect of cash flow hedge accounting on accumulated OCI | The following table presents the pre-tax effect of cash flow hedge accounting on accumulated OCI for the periods presented: (In thousands) Amount of Gain or (Loss) Recognized in OCI 13 Weeks Ended Derivatives in Subtopic 815-20 Hedging Relationships April 1, 2023 March 26, 2022 Derivatives in cash flow hedging relationships Interest rate caps $ (294) $ — (In thousands) Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income 13 Weeks Ended Location of Gain or (Loss) Reclassified from Accumulated OCI into Income April 1, 2023 March 26, 2022 Derivatives in cash flow hedging relationships Interest expense, net $ 254 $ — |
Schedule of derivative financial instruments on Statements of Operations | The following table presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations for the periods presented: Gain (Loss) Recognized 13 Weeks Ended April 1, March 26, (In thousands) Statement of Operations Location 2023 2022 Total amounts of expense presented in the Statements of Operations in which the derivatives not designated as hedging are recorded Selling, general and administrative $ 43,414 $ 33,915 The effects of derivatives not designated as hedging instruments under Subtopic 815-20: Foreign currency contracts Selling, general and administrative 100 — Total amounts of expense presented in the Statements of Operations in which the derivatives designated as hedging are recorded Interest expense, net 8,701 6,022 The effects of derivatives designated as hedging instruments under Subtopic 815-20: Interest rate caps Interest expense, net 254 — |
Schedule of net amounts of derivative assets | Offsetting of Derivative Assets As of April 1, 2023 Gross Amounts Not Offset in the Balance Sheet (In thousands) Gross Amounts of Recognized Assets Gross Amounts Offset in the Balance Sheet Net Amounts of Assets Presented in the Balance Sheet Financial Instruments Cash Collateral Posted Gross Amounts of Recognized Assets Derivatives Foreign currency contracts $ 620 $ (520) $ 100 $ — $ — $ 100 Total derivatives, subject to a master netting arrangement 620 (520) 100 — — 100 Total derivatives, not subject to a master netting arrangement 2,915 — 2,915 — — 2,915 Total derivatives $ 3,535 $ (520) $ 3,015 $ — $ — $ 3,015 Offsetting of Derivative Assets As of December 31, 2022 Gross Amounts Not Offset in the Balance Sheet (In thousands) Gross Amounts of Recognized Assets Gross Amounts Offset in the Balance Sheet Net Amounts of Assets Presented in the Balance Sheet Financial Instruments Cash Collateral Posted Gross Amounts of Recognized Assets Derivatives Foreign currency contracts $ 56 $ (56) $ — $ — $ — $ — Total derivatives, subject to a master netting arrangement 56 (56) — — — — Total derivatives, not subject to a master netting arrangement 3,628 — — — — 3,628 Total derivatives $ 3,684 $ (56) $ — $ — $ — $ 3,628 |
Schedule of net amounts of derivative liabilities | Offsetting of Derivative Liabilities As of April 1, 2023 Gross Amounts Not Offset in the Balance Sheet (In thousands) Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Balance Sheet Net Amounts of Liabilities Presented in the Balance Sheet ' Financial Instruments Cash Collateral Posted Net Amount Derivatives Foreign currency contracts $ (520) $ 520 $ $ — $ — $ Total derivatives, subject to a master netting arrangement (520) 520 — — — — Total derivatives, not subject to a master netting arrangement — — — — — — Total derivatives $ (520) $ 520 $ - $ — $ — $ - Offsetting of Derivative Liabilities As of December 31, 2022 Gross Amounts Not Offset in the Balance Sheet (In thousands) Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Balance Sheet Net Amounts of Liabilities Presented in the Balance Sheet Financial Instruments Cash Collateral Posted Net Amount Derivatives Foreign currency contracts $ (89) $ 56 $ (33) $ — $ — $ (33) Total derivatives, subject to a master netting arrangement (89) 56 (33) — — (33) Total derivatives, not subject to a master netting arrangement — — — — — — Total derivatives $ (89) $ 56 $ (33) $ — $ — $ (33) |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Equity-Based Compensation. | |
Schedule of equity-based compensation expense | Fiscal Year Ended (In thousands) April 1, 2023 March 26, 2022 Equity awards under the 2017 Plan (Pre-IPO) RSAs $ 138 $ 356 PSAs 1,607 1,561 Total equity-based compensation expense for the 2017 Plan 1,745 1,917 Equity awards under the 2021 Plan (Post-IPO) RSUs 2,886 1,480 PSUs 877 690 Total equity-based compensation expense for the 2021 Plan 3,763 2,170 Total equity-based compensation expense $ 5,508 $ 4,087 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Income Taxes | |
Schedule of income tax expense (benefit) | 13 Weeks Ended (In thousands) April 1, 2023 March 26, 2022 Income before income taxes $ 12,717 $ 6,768 Effective income tax (expense) $ (4,871) $ (2,711) Effective tax rate 38.3 % 40.0 % |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Related Party Transaction [Line Items] | |
Schedule of transactions with related party | 13 Weeks Ended (In thousands) April 1, 2023 March 26, 2022 Sales $ 113 $ 117 Purchases $ 1,920 $ 1,970 (In thousands) April 1, 2023 December 31, 2022 Receivables $ 21 $ 29 Payables $ — $ 870 |
Schedule of estimated annual minimum purchase commitments with suppliers | Fiscal Year Ending (In thousands) Remainder of 2023 $ 1,827 2024 3,500 2025 1,492 2026 — 2027 — Thereafter — Total $ 6,819 |
Morning Fresh | |
Related Party Transaction [Line Items] | |
Schedule of estimated annual minimum purchase commitments with suppliers | Fiscal Year Ending (In thousands) Remainder of 2023 $ 6,228 2024 8,375 2025 8,375 2026 8,375 2027 8,375 Thereafter — Total $ 39,728 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Earnings Per Share | |
Schedule of Basic and diluted earnings (loss) per share | 13 Weeks Ended (In thousands, except share and per share amounts) April 1, 2023 March 26, 2022 Net income $ 7,846 $ 4,057 Weighted average basic common shares outstanding 101,186,223 100,892,547 Effect of dilutive securities: Restricted stock units 190,602 369,556 Performance stock units 130,871 — Total 321,473 369,556 Weighted average and potential dilutive common shares outstanding 101,507,696 101,262,103 Earnings per share Basic $ 0.08 $ 0.04 Diluted $ 0.08 $ 0.04 |
Company Overview (Details)
Company Overview (Details) | Apr. 01, 2023 subsidiary |
Sovos Brands Intermediate, Inc. | |
Consolidation, Wholly Owned Subsidiary, Parent Ownership Interest [Line Items] | |
Number of subsidiaries | 4 |
Loss on Asset Sale (Details)
Loss on Asset Sale (Details) - Disposed by sale - Birch Benders brand $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Loss on Asset Sale | |
Proceeds from sale of business | $ 40,000 |
Inventory | (5,424) |
Intangible assets, net | (85,867) |
Total assets sold | (91,291) |
Loss on asset sale | $ (51,291) |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Mar. 26, 2022 | |
Revenue Recognition | ||
Total net sales | $ 252,791 | $ 209,933 |
Rao's | ||
Revenue Recognition | ||
Total net sales | 189,191 | 137,412 |
Noosa | ||
Revenue Recognition | ||
Total net sales | 45,284 | 41,851 |
Michael Angelo's | ||
Revenue Recognition | ||
Total net sales | 19,102 | 20,242 |
Birch Benders | ||
Revenue Recognition | ||
Total net sales | $ (786) | $ 10,428 |
Inventories, Net (Details)
Inventories, Net (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Inventories, Net | ||
Finished goods | $ 73,205 | $ 76,404 |
Raw materials and packaging supplies | 13,522 | 16,198 |
Total inventories, net | $ 86,727 | $ 92,602 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Mar. 26, 2022 | |
Goodwill | ||
Impairment | $ 0 | $ 0 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Intangible assets - definite lives | ||
Gross carrying amount | $ 309,047 | $ 405,347 |
Accumulated amortization | 116,106 | 120,933 |
Sale of intangible assets | 0 | 85,867 |
Total | 192,941 | 198,547 |
Intangible assets - indefinite lives | ||
Gross Carrying Amount | 462,047 | 558,347 |
Accumulated amortization | 116,106 | 120,933 |
Sale of intangible assets | 85,867 | |
Net carrying amount | 345,941 | 351,547 |
Tradename | ||
Intangible assets - indefinite lives | ||
Net carrying amount | 153,000 | 153,000 |
Customer relationships | ||
Intangible assets - definite lives | ||
Gross carrying amount | 207,300 | 213,000 |
Accumulated amortization | 92,979 | 89,201 |
Sale of intangible assets | 5,082 | |
Total | 114,321 | 118,717 |
Intangible assets - indefinite lives | ||
Accumulated amortization | 92,979 | 89,201 |
Tradename | ||
Intangible assets - definite lives | ||
Gross carrying amount | 101,747 | 192,347 |
Accumulated amortization | 23,127 | 31,732 |
Sale of intangible assets | 80,785 | |
Total | 78,620 | 79,830 |
Intangible assets - indefinite lives | ||
Accumulated amortization | $ 23,127 | $ 31,732 |
Intangible Assets, Net - Narrat
Intangible Assets, Net - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2023 | Mar. 26, 2022 | Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | $ 5,600 | $ 6,800 | |
Sales of definite lived intangible assets | 0 | $ 85,867 | |
Impairment charges | $ 0 | $ 0 | |
Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Sales of definite lived intangible assets | 5,082 | ||
Tradename | |||
Finite-Lived Intangible Assets [Line Items] | |||
Sales of definite lived intangible assets | 80,785 | ||
Birch Benders | Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Sales of definite lived intangible assets | 5,100 | ||
Birch Benders | Tradename | |||
Finite-Lived Intangible Assets [Line Items] | |||
Sales of definite lived intangible assets | $ 80,800 |
Intangible Assets, Net - Amorti
Intangible Assets, Net - Amortization expense (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
Remainder of 2023 | $ 16,819 | |
2024 | 22,425 | |
2025 | 22,425 | |
2026 | 22,425 | |
2027 | 17,782 | |
Thereafter | 91,065 | |
Total | $ 192,941 | $ 198,547 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Accrued Expenses | ||
Accrued trade | $ 30,419 | $ 32,337 |
Accrued general expense | 17,784 | 17,911 |
Accrued compensation and benefits | 8,412 | 17,328 |
Accrued marketing | 1,064 | 1,995 |
Total accrued expenses | $ 57,679 | $ 69,571 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-term debt (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Long-term debt | ||
Principal | $ 487,797 | $ 487,817 |
Unamortized debt issuance costs | (5,123) | (5,374) |
Finance lease liabilities | $ 6,997 | $ 7,017 |
Finance Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Total debt | Total debt |
Total debt | $ 482,674 | $ 482,443 |
Less: current portion of finance lease liabilities | 94 | 99 |
Total long-term debt | 482,580 | 482,344 |
Initial First Lien Term Loan Facility | ||
Long-term debt | ||
Principal | 480,800 | 480,800 |
Unamortized debt issuance costs | (5,123) | (5,374) |
Total debt, net | $ 475,677 | $ 475,426 |
Long-Term Debt (Details)
Long-Term Debt (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 USD ($) | Apr. 01, 2023 USD ($) | Mar. 26, 2022 USD ($) | Dec. 25, 2021 USD ($) | Dec. 31, 2022 USD ($) | |
Long-term debt | |||||
Principal | $ 487,797 | $ 487,817 | |||
Amortization of debt issuance costs | 316 | $ 316 | |||
Interest expense net | |||||
Long-term debt | |||||
Amortization of debt issuance costs | 300 | $ 300 | |||
Initial First Lien Term Loan Facility | |||||
Long-term debt | |||||
Prepayment of debt | $ 99,200 | ||||
Loss on the extinguishment | $ (1,400) | ||||
Principal | 480,800 | ||||
Payment of debt issuance costs | $ 6,800 | ||||
Threshold limit of Percentage of minimum interest rate | 0% | ||||
Revolving Facility | |||||
Long-term debt | |||||
Payment of debt issuance costs | $ 1,100 | ||||
Amortization of debt issuance costs | $ 200 | ||||
Available credit | 125,000 | 125,000 | |||
Outstanding debt | 0 | ||||
Initial Second Lien Facility | |||||
Long-term debt | |||||
Threshold limit of Percentage of minimum interest rate | 0.75% | ||||
First Lien Revolving Line of Credit | |||||
Long-term debt | |||||
Threshold limit of Percentage of minimum interest rate | 0% | ||||
Outstanding debt | $ 0 | $ 0 | |||
First Lien Credit Agreement | |||||
Long-term debt | |||||
Threshold limit, maximum leverage ratio of consolidated first lien net debt to consolidated EBITDA | 6.95 | ||||
Financial covenant testing threshold percentage of aggregate revolving credit commitments | 35% | ||||
First Lien Credit Agreement | Initial First Lien Term Loan Facility | |||||
Long-term debt | |||||
Loan amount | $ 580,000 | ||||
First Lien Credit Agreement | Revolving Facility | |||||
Long-term debt | |||||
Available credit | 125,000 | ||||
First Lien Credit Agreement | Letter of credit facility | |||||
Long-term debt | |||||
Available credit | $ 45,000 | ||||
Initial First Lien Term Loan Facility and Revolving Facility | |||||
Long-term debt | |||||
Percentage of reduction in interest upon consummation of an IPO | 0.50% | ||||
Effective interest rate (as a percent) | 8.33% | 7.91% | |||
Initial First Lien Term Loan Facility and Revolving Facility | LIBOR | Minimum | |||||
Long-term debt | |||||
Interest rate (as a percent) | 4% | ||||
Initial First Lien Term Loan Facility and Revolving Facility | LIBOR | Maximum | |||||
Long-term debt | |||||
Interest rate (as a percent) | 4.25% | ||||
Initial First Lien Term Loan Facility | |||||
Long-term debt | |||||
Principal | $ 480,800 | $ 480,800 | |||
Debt discounts on issuance | $ 1,500 |
Leases - Components of lease ex
Leases - Components of lease expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Mar. 26, 2022 | |
Operating lease cost: | ||
Total operating lease cost | $ 1,238 | $ 1,203 |
Total finance lease cost | 197 | 198 |
Total lease cost | 1,470 | 1,447 |
Cost of sales and Selling, general and administrative | ||
Operating lease cost: | ||
Lease cost | 811 | 840 |
Variable lease cost | 427 | 363 |
Short term lease cost | 35 | 46 |
Amortization of right-of-use assets | 65 | 65 |
Interest expense net | ||
Operating lease cost: | ||
Interest on lease liabilities | $ 132 | $ 133 |
Minimum | ||
Leases | ||
Lease term | 2 years | |
Maximum | ||
Leases | ||
Lease term | 10 years | |
Equipment | ||
Leases | ||
Lease term | 5 years | |
Manufacturing facilities and office space | ||
Leases | ||
Lessor, Operating Lease, Existence of Option to Extend [true false] | true | |
Manufacturing facilities and office space | Minimum | ||
Leases | ||
Lease term | 2 years | |
Manufacturing facilities and office space | Maximum | ||
Leases | ||
Lease term | 30 years |
Leases - Assets and Liabilities
Leases - Assets and Liabilities (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Leases | ||
Operating lease right-of-use assets | $ 12,724 | $ 13,332 |
Finance lease right-of-use assets | $ 5,973 | $ 6,038 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property, Plant and Equipment, Net | Property, Plant and Equipment, Net |
Total lease assets | $ 18,697 | $ 19,370 |
Current portion of long-term operating lease liabilities | 3,365 | 3,308 |
Current portion of long-term finance lease liabilities | $ 94 | $ 99 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Long-term Debt and Lease Obligation, Current | Long-term Debt and Lease Obligation, Current |
Operating lease liability, long-term | $ 13,204 | $ 14,063 |
Finance lease liabilities, long-term | $ 6,903 | $ 6,918 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Long-term Debt and Lease Obligation | Long-term Debt and Lease Obligation |
Total lease liabilities | $ 23,566 | $ 24,388 |
Leases - Other information (Det
Leases - Other information (Details) | Apr. 01, 2023 | Dec. 31, 2022 |
Leases | ||
Weighted-average remaining lease term (years) - operating leases | 6 years 3 months 18 days | 6 years 4 months 24 days |
Weighted-average remaining lease term (years) - Finance leases | 34 years 1 month 6 days | 34 years 2 months 12 days |
Weighted-average discount rate - operating leases | 5% | 4.90% |
Weighted-average discount rate - Finance leases | 7.90% | 7.80% |
Leases - Future maturities of l
Leases - Future maturities of lease liabilities (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Operating Leases | ||
Remainder of 2023 | $ 3,058 | |
2024 | 3,493 | |
2025 | 2,982 | |
2026 | 3,005 | |
2027 | 3,064 | |
Thereafter | 3,856 | |
Total lease payments | 19,458 | |
Less: Interest | (2,889) | |
Present value of lease liabilities | 16,569 | |
Finance Leases | ||
Remainder of 2023 | 457 | |
2024 | 557 | |
2025 | 549 | |
2026 | 520 | |
2027 | 525 | |
Thereafter | 18,445 | |
Total lease payments | 21,053 | |
Less: Interest | (14,056) | |
Present value of lease liabilities | $ 6,997 | $ 7,017 |
Leases - Supplemental cash flow
Leases - Supplemental cash flow and other information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Mar. 26, 2022 | |
Leases | ||
Operating cash flows from operating leases | $ 1,004 | $ 1,011 |
Operating cash flows from finance leases | 132 | 133 |
Financing cash flows from finance leases | $ 20 | $ 24 |
Commitments and Contingencies -
Commitments and Contingencies - Estimated annual minimum purchase commitments with suppliers (Details) - Third Parties $ in Thousands | Apr. 01, 2023 USD ($) |
Purchase commitments with suppliers | |
Remainder of 2023 | $ 1,827 |
2024 | 3,500 |
2025 | 1,492 |
Total | $ 6,819 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Apr. 01, 2023 | Dec. 31, 2022 | |
Fair Value of Financial Instruments | ||
Asset transfer from level 1 to level 2 | $ 0 | $ 0 |
Asset transfer from level 2 to level 1 | 0 | 0 |
Liabilities transfer from level 1 to level 2 | 0 | 0 |
Liabilities transfer from level 2 to level 1 | 0 | 0 |
Assets transfer in or out of level 3 | 0 | 0 |
Liability transfer in or out of level 3 | $ 0 | $ 0 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Assets and liabilities measured at fair value on recurring basis (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets | $ 3,015 | $ 3,628 |
Total Liabilities | 33 | |
Designated as Hedging Instrument | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets | 2,915 | 3,628 |
Not Designated as Hedging Instrument | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets | 100 | |
Total Liabilities | 33 | |
Recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets | 3,015 | 3,628 |
Total Liabilities | 33 | |
Recurring basis | Not Designated as Hedging Instrument | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets | $ 100 | |
Total Liabilities | $ 33 | |
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Other Liabilities, Noncurrent | Other Liabilities, Noncurrent |
Recurring basis | Cash flow hedging | Designated as Hedging Instrument | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets | $ 2,915 | $ 3,628 |
Recurring basis | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets | 3,015 | 3,628 |
Total Liabilities | 33 | |
Recurring basis | Significant Other Observable Inputs (Level 2) | Not Designated as Hedging Instrument | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets | 100 | |
Total Liabilities | 33 | |
Recurring basis | Significant Other Observable Inputs (Level 2) | Cash flow hedging | Designated as Hedging Instrument | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets | $ 2,915 | $ 3,628 |
Hedging and Derivative Financ_3
Hedging and Derivative Financial Instruments - Fair value of derivative instruments (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Assets | ||
Total Assets | $ 3,015 | $ 3,628 |
Liabilities | ||
Total Liabilities | 33 | |
Not Designated as Hedging Instrument | ||
Assets | ||
Total Assets | 100 | |
Liabilities | ||
Total Liabilities | 33 | |
Designated as Hedging Instrument | ||
Assets | ||
Total Assets | 2,915 | $ 3,628 |
Foreign exchange contract | Not Designated as Hedging Instrument | ||
Assets | ||
Total Assets | $ 100 | |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Prepaid Expense and Other Assets, Current | Prepaid Expense and Other Assets, Current |
Liabilities | ||
Total Liabilities | $ 33 | |
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Accrued Liabilities, Current | Accrued Liabilities, Current |
Interest rate cap | Prepaid expenses and other current assets | Designated as Hedging Instrument | ||
Assets | ||
Total Assets | $ 2,059 | $ 1,997 |
Interest rate cap | Other long-term assets | Designated as Hedging Instrument | ||
Assets | ||
Total Assets | $ 856 | $ 1,631 |
Hedging and Derivative Financ_4
Hedging and Derivative Financial Instruments - Pre-tax effect of cash flow hedge accounting on accumulated OCI (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2023 | Mar. 26, 2022 | Dec. 31, 2022 | |
Derivative [Line Items] | |||
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income | $ 900 | ||
Designated as Hedging Instrument | Cash flow hedging | |||
Derivative [Line Items] | |||
Total notional value | 240,000 | ||
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income | $ 254 | ||
Derivative Instrument, Gain (Loss) Reclassified from AOCI into Income, Effective Portion, Statement of Income or Comprehensive Income [Extensible Enumeration] | Interest Income (Expense), Net | Interest Income (Expense), Net | |
Designated as Hedging Instrument | LIBOR | Cash flow hedging | |||
Derivative [Line Items] | |||
Interest rate cap | 4% | ||
Foreign exchange contract | Not Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Total notional value | $ 270,900 | $ 145,700 | |
Interest rate cap | Designated as Hedging Instrument | Cash flow hedging | |||
Derivative [Line Items] | |||
Amount of Gain or (Loss) Recognized in OCI | $ (294) |
Hedging and Derivative Financ_5
Hedging and Derivative Financial Instruments - Effect of derivative financial instruments on Statements of Operations (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Mar. 26, 2022 | |
Derivative [Line Items] | ||
Gain (Loss) Recognized | $ 43,414 | $ 33,915 |
Cash flow hedging | ||
Derivative [Line Items] | ||
Gain (Loss) Recognized | 8,701 | $ 6,022 |
Foreign exchange contract | ||
Derivative [Line Items] | ||
Gain (Loss) Recognized | 100 | |
Interest rate cap | Cash flow hedging | ||
Derivative [Line Items] | ||
Gain (Loss) Recognized | $ 254 |
Hedging and Derivative Financ_6
Hedging and Derivative Financial Instruments - Offsetting of Derivative Assets (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Derivatives, subject to a master netting arrangement | ||
Gross Amounts of Recognized Assets | $ 3,535 | $ 3,684 |
Gross Amounts Offset in the Balance Sheet | (520) | (56) |
Gross Amounts Not Offset in the Balance Sheet, Gross Amounts of Recognized Assets | 3,015 | 3,628 |
Derivatives, not subject to a master netting arrangement | ||
Gross Amounts Not Offset in the Balance Sheet, Gross Amounts of Recognized Assets | 3,015 | 3,628 |
Assets | ||
Gross Amounts of Recognized Assets | 3,535 | 3,684 |
Gross Amounts Offset in the Balance Sheet | (520) | (56) |
Total Assets | 3,015 | 3,628 |
Gross Amounts Not Offset in the Balance Sheet, Gross Amounts of Recognized Assets | 3,015 | 3,628 |
Foreign currency contract derivatives subject to master netting | ||
Derivatives, subject to a master netting arrangement | ||
Gross Amounts of Recognized Assets | 620 | 56 |
Gross Amounts Offset in the Balance Sheet | (520) | (56) |
Net Amounts of Assets Presented in the Balance Sheet | 100 | |
Gross Amounts Not Offset in the Balance Sheet, Gross Amounts of Recognized Assets | 100 | |
Derivatives, not subject to a master netting arrangement | ||
Gross Amounts Not Offset in the Balance Sheet, Gross Amounts of Recognized Assets | 100 | |
Assets | ||
Gross Amounts of Recognized Assets | 620 | 56 |
Gross Amounts Offset in the Balance Sheet | (520) | (56) |
Gross Amounts Not Offset in the Balance Sheet, Gross Amounts of Recognized Assets | 100 | |
Derivatives not Subject to master netting | ||
Derivatives, subject to a master netting arrangement | ||
Gross Amounts Not Offset in the Balance Sheet, Gross Amounts of Recognized Assets | 2,915 | 3,628 |
Derivatives, not subject to a master netting arrangement | ||
Gross Amounts Offset in the Balance Sheet | 2,915 | 3,628 |
Net Amounts of Assets Presented in the Balance Sheet | 2,915 | |
Gross Amounts Not Offset in the Balance Sheet, Gross Amounts of Recognized Assets | 2,915 | 3,628 |
Assets | ||
Gross Amounts Not Offset in the Balance Sheet, Gross Amounts of Recognized Assets | $ 2,915 | $ 3,628 |
Hedging and Derivative Financ_7
Hedging and Derivative Financial Instruments - Offsetting of Derivative Liabilities (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Derivative Liability, Subject to Master Netting Arrangement, after Offset and Deduction [Abstract] | ||
Gross Amounts of Recognized Liabilities | $ (520) | $ (89) |
Gross Amounts Offset in the Balance Sheet | 520 | 56 |
Net Amounts of Liabilities Presented in the Balance Sheet | (33) | |
Net Amount | (33) | |
Liabilities | ||
Gross Amounts of Recognized Liabilities | (520) | (89) |
Gross Amounts Offset in the Balance Sheet | 520 | 56 |
Net Amounts of Liabilities Presented in the Balance Sheet | (33) | |
Net Amount | (33) | |
Foreign currency contract derivatives subject to master netting | ||
Derivative Liability, Subject to Master Netting Arrangement, after Offset and Deduction [Abstract] | ||
Gross Amounts of Recognized Liabilities | (520) | (89) |
Gross Amounts Offset in the Balance Sheet | 520 | 56 |
Net Amounts of Liabilities Presented in the Balance Sheet | (33) | |
Net Amount | (33) | |
Liabilities | ||
Gross Amounts of Recognized Liabilities | (520) | (89) |
Gross Amounts Offset in the Balance Sheet | $ 520 | 56 |
Net Amounts of Liabilities Presented in the Balance Sheet | (33) | |
Net Amount | $ (33) |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | Aug. 22, 2022 | Aug. 10, 2022 | Oct. 05, 2021 | Sep. 27, 2021 | Apr. 01, 2023 | Dec. 31, 2022 | Sep. 26, 2021 | Sep. 23, 2021 |
Subsidiary, Sale of Stock [Line Items] | ||||||||
Shares authorized | 510,000,000 | |||||||
Common stock, authorized (in shares) | 500,000,000 | 500,000,000 | 500,000,000 | |||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | |||||
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 | 10,000,000 | |||||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | |||||
Preferred stock, issued (in shares) | 0 | 0 | ||||||
Preferred stock, outstanding (in shares) | 0 | 0 | ||||||
Common stock, issued (in shares) | 101,226,478 | 100,967,910 | 74,058,447 | |||||
Common stock, outstanding (in shares) | 101,226,478 | 100,967,910 | 74,058,447 | |||||
Common stock issued (in shares) | 1,275,000 | 8,500,000 | ||||||
Offering price (in dollar per share) | $ 14 | |||||||
IPO | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Common stock, par value (in dollars per share) | $ 0.001 | |||||||
Common stock issued (in shares) | 23,334,000 | |||||||
Offering price (in dollar per share) | $ 12 | |||||||
Net proceeds from IPO | $ 263.2 | |||||||
Underwriting discounts and commissions | $ 16.8 | |||||||
Over-Allotment Option | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Common stock issued (in shares) | 3,500,100 | |||||||
Net proceeds from IPO | $ 39.5 | |||||||
Underwriting discounts and commissions | $ 2.5 |
Equity-Based Compensation (Deta
Equity-Based Compensation (Details) $ in Thousands | 3 Months Ended | |||||||
Feb. 22, 2023 USD ($) | Feb. 10, 2023 USD ($) tranche | Nov. 04, 2021 USD ($) tranche | Nov. 03, 2021 tranche shares | Sep. 22, 2021 USD ($) item tranche | Sep. 21, 2021 shares | Apr. 01, 2023 USD ($) installment shares | Mar. 26, 2022 USD ($) installment shares | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Allocated share based payments | $ | $ 5,508 | $ 4,087 | ||||||
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ | 43,800 | |||||||
2021 Equity Incentive Plan | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Allocated share based payments | $ | $ 3,763 | 2,170 | ||||||
Shares reserved for future issuance | 9,739,244 | 6,286,912 | ||||||
Time Based Restricted Common Stock | Modification to Two Thousand Twenty One Equity Incentive | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Modified grant date fair value | $ | $ 5,500 | |||||||
Time Based Restricted Common Stock | Modification to Two Thousand Twenty One Equity Incentive | Tranche One | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Vesting percentage | 50% | |||||||
Time Based Restricted Common Stock | Modification to Two Thousand Twenty One Equity Incentive | Tranche Two | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Vesting percentage | 50% | |||||||
Performance Based Incentive Units | Tranche One | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Vested | 169,698 | |||||||
Vesting percentage | 50% | |||||||
Performance Based Incentive Units | Tranche Two | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Vested | 509,210 | |||||||
Vesting percentage | 50% | |||||||
Performance Based Incentive Units | Tranche Three | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Vested | 1,669,971 | |||||||
Performance Based Restricted Stock Units | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Allocated share based payments | $ | $ 877 | $ 690 | ||||||
Vesting percentage | 100% | |||||||
Performance Based Restricted Stock Units | Employees | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Grants in period | 429,082 | 343,800 | ||||||
Performance Based Restricted Stock Units | Minimum | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Percentage of shares may be earned | 0% | |||||||
Performance Based Restricted Stock Units | Maximum | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Percentage of shares may be earned | 200% | |||||||
Performance Based Restricted Stock Units | 2021 Equity Incentive Plan | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Vesting percentage | 100% | |||||||
Performance Based Restricted Stock Units | 2021 Equity Incentive Plan | Employees | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Grants in period | 687,690 | |||||||
Performance Based Restricted Common Stock | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Modified grant date fair value | $ | $ 6,100 | |||||||
Multiplying factor for invested capital | tranche | 4 | 2 | 2 | |||||
Volume of weighted average share price, number of day | item | 30 | |||||||
Maximum percentage owned by ultimate parent | 25% | |||||||
Term of post IPO | 30 months | |||||||
Vested | 683,442 | |||||||
Fair value of Incentive Units | $ | $ 13,000 | |||||||
Performance Based Restricted Common Stock | Modification to Two Thousand Twenty One Equity Incentive | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Modified grant date fair value | $ | $ 4,300 | |||||||
Performance Based Restricted Common Stock | Modification to Two Thousand Twenty One Equity Incentive | Tranche One | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Vesting percentage | 50% | |||||||
Performance Based Restricted Common Stock | Modification to Two Thousand Twenty One Equity Incentive | Tranche Two | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Vesting percentage | 50% | |||||||
Service Based Restricted Common Stock | Tranche One | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Vested | 5,563 | |||||||
Service Based Restricted Common Stock | Tranche Two | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Vested | 2,348,879 | |||||||
Restricted Stock Units | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Allocated share based payments | $ | $ 2,886 | $ 1,480 | ||||||
Restricted Stock Units | Employees | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Grants in period | 561,355 | |||||||
Restricted Stock Units | Employees and Independent Directors | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Grants in period | 418,136 | |||||||
Restricted Stock Units | Vesting in Two Installments | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Grants in period | 485,316 | |||||||
Number of installments | installment | 2 | |||||||
Restricted Stock Units | Vesting in Two Installments | Employees | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Grants in period | 323,172 | |||||||
Number of equal installmetns | installment | 2 | |||||||
Restricted Stock Units | Vesting in Three Installments | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Grants in period | 76,039 | |||||||
Number of installments | installment | 3 | |||||||
Restricted Stock Units | Vesting in Three Installments | Employees | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Grants in period | 94,964 | |||||||
Number of equal installmetns | installment | 3 | |||||||
Restricted stock | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Allocated share based payments | $ | $ 138 | $ 356 | ||||||
Restricted stock | Modification to Two Thousand Twenty One Equity Incentive | Minimum | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Multiplying factor for invested capital | tranche | 3 | |||||||
Restricted stock | Modification to Two Thousand Twenty One Equity Incentive | Maximum | ||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||||
Multiplying factor for invested capital | tranche | 4 |
Equity-Based Compensation - Com
Equity-Based Compensation - Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Mar. 26, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | $ 5,508 | $ 4,087 |
RSAs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | 138 | 356 |
PSAs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | 1,607 | 1,561 |
RSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | 2,886 | 1,480 |
PSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | 877 | 690 |
2017 Equity Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | 1,745 | 1,917 |
2021 Equity Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | $ 3,763 | $ 2,170 |
Income Taxes - Effective tax ra
Income Taxes - Effective tax rate (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Mar. 26, 2022 | |
Income Taxes | ||
Income before income taxes | $ 12,717 | $ 6,768 |
Effective income tax (expense) | $ (4,871) | $ (2,711) |
Effective tax rate | 38.30% | 40% |
Federal income tax rate | 21% | 21% |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2023 USD ($) item | Mar. 26, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Related Party Transaction [Line Items] | |||
Related party leases | item | 2 | ||
Finance lease liability | $ 6,903 | $ 6,918 | |
Operating lease liability, long-term | 13,204 | $ 14,063 | |
Morning Fresh | |||
Related Party Transaction [Line Items] | |||
Finance lease liability | 6,800 | ||
Operating lease liability, long-term | 500 | ||
Total facility lease payments | 145 | $ 142 | |
Shares of utilities | $ 45 | $ 46 |
Related Party Transactions - Tr
Related Party Transactions - Transactions (Details) - Morning Fresh - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2023 | Mar. 26, 2022 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | |||
Sales | $ 113 | $ 117 | |
Purchases | 1,920 | $ 1,970 | |
Receivables | $ 21 | $ 29 | |
Payables | $ 870 |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) | 3 Months Ended | |
Apr. 01, 2023 USD ($) item | Dec. 31, 2022 USD ($) | |
Morning Fresh | Milk supply agreement | ||
Related Party Transaction [Line Items] | ||
Number of additional periods | item | 15 | |
Term of extension period | 2 years | |
Written notice required to terminate agreement | 4 years | |
Maximum quantity agreed to be received | 3,650,000 | |
Future commitments to purchase | $ 37,800,000 | |
Monthly additional costs | 33,000 | |
Early termination penalty | $ 0 | |
Term of Agreement | 10 years | |
Morning Fresh | Milk supply agreement | Maximum | ||
Related Party Transaction [Line Items] | ||
Early termination penalty | $ 3,000,000 | |
Sovos Brands Limited Partnership | ||
Related Party Transaction [Line Items] | ||
Receivable balance | $ 100,000 | $ 100,000 |
Related Party Transactions - Su
Related Party Transactions - Summary of estimated annual minimum purchase commitments (Details) - Related parties - Morning Fresh $ in Thousands | Apr. 01, 2023 USD ($) |
Purchase commitments with suppliers | |
Remainder of 2023 | $ 6,228 |
2024 | 8,375 |
2025 | 8,375 |
2026 | 8,375 |
2027 | 8,375 |
Total | $ 39,728 |
Earnings Per Share - Basic and
Earnings Per Share - Basic and Diluted earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Mar. 26, 2022 | |
Earnings Per Share | ||
Net income | $ 7,846 | $ 4,057 |
Weighted average basic common shares outstanding | 101,186,223 | 100,892,547 |
Restricted stock units | 190,602 | 369,556 |
Performance stock units | 130,871 | |
Total | 321,473 | 369,556 |
Weighted average and potential diluted common shares outstanding | 101,507,696 | 101,262,103 |
Earnings per share | ||
Basic (in dollars per shares) | $ 0.08 | $ 0.04 |
Diluted (in dollars per shares) | $ 0.08 | $ 0.04 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares | 3 Months Ended | |
Apr. 01, 2023 | Mar. 26, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive shares | 0 | |
Performance Stock Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive shares | 429,082 |