B&G Foods, Inc. [BGS] Filings

10-Q 1 bgs-20230930x10q.htm 10-Q

As filed with the Securities and Exchange Commission on November 9, 2023

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


	For the quarterly period ended September 30, 2023 or

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to .

Commission file number 001-32316

B&G FOODS, INC.

(Exact name of Registrant as specified in its charter)


Delaware		13-3918742
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

Four Gatehall Drive, Parsippany, New Jersey		07054
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (973) 401-6500

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	BGS	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 3, 2023, the registrant had 78,624,419 shares of common stock, par value $0.01 per share, issued and outstanding.

Table of Contents

B&G Foods, Inc. and Subsidiaries

Index

r
		Page No.

PART I FINANCIAL INFORMATION		1

	Item 1. Financial Statements (Unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Consolidated Statements of Comprehensive Loss	3
	Consolidated Statements of Changes in Stockholders’ Equity	4
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	42
	Item 4. Controls and Procedures	44

PART II OTHER INFORMATION		44

	Item 1. Legal Proceedings	44
	Item 1A. Risk Factors	45
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	45
	Item 3. Defaults Upon Senior Securities	45
	Item 4. Mine Safety Disclosures	45
	Item 5. Other Information	45
	Item 6. Exhibits	46

SIGNATURE		47

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Forward-Looking Statements

This report includes forward-looking statements, including, without limitation, the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The words “believes,” “belief,” “expects,” “projects,” “intends,” “anticipates,” “assumes,” “could,” “should,” “estimates,” “potential,” “seek,” “predict,” “may,” “will” or “plans” and similar references to future periods are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by any forward-looking statements. We believe important factors that could cause actual results to differ materially from our expectations include the following:

●

our substantial leverage;

●

the effects of rising costs for and/or decreases in the supply of commodities, ingredients, packaging, other raw materials, distribution and labor;

●

crude oil prices and their impact on distribution, packaging and energy costs;

●

our ability to successfully implement sales price increases and cost saving measures to offset any cost increases;

●

intense competition, changes in consumer preferences, demand for our products and local economic and market conditions;

●

our continued ability to promote brand equity successfully, to anticipate and respond to new consumer trends, to develop new products and markets, to broaden brand portfolios in order to compete effectively with lower priced products and in markets that are consolidating at the retail and manufacturing levels and to improve productivity;

●

the ability of our company and our supply chain partners to continue to operate manufacturing facilities, distribution centers and other work locations without material disruption, and to procure ingredients, packaging and other raw materials when needed despite disruptions in the supply chain or labor shortages;

●

the impact pandemics or disease outbreaks, such as the COVID-19 pandemic, may have on our business, including among other things, our supply chain, our manufacturing operations, our workforce and customer and consumer demand for our products;

●

our ability to recruit and retain senior management and a highly skilled and diverse workforce at our corporate offices, manufacturing facilities and other work locations despite a very tight labor market and changing employee expectations as to fair compensation, an inclusive and diverse workplace, flexible working and other matters;

●

the risks associated with the expansion of our business;

●

our possible inability to identify new acquisitions or to integrate recent or future acquisitions, or our failure to realize anticipated revenue enhancements, cost savings or other synergies from recent or future acquisitions;

●

our ability to successfully complete the integration of recent or future acquisitions into our enterprise resource planning (ERP) system;

●

tax reform and legislation, including the effects of the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, U.S. Tax Cuts and Jobs Act and the U.S. CARES Act, and any future tax reform or legislation;

●

our ability to access the credit markets and our borrowing costs and credit ratings, which may be influenced by credit markets generally and the credit ratings of our competitors;

●

unanticipated expenses, including, without limitation, litigation or legal settlement expenses;

●

the effects of currency movements of the Canadian dollar and the Mexican peso as compared to the U.S. dollar;

●

the effects of international trade disputes, tariffs, quotas, and other import or export restrictions on our international procurement, sales and operations;

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●

future impairments of our goodwill and intangible assets;

●

our ability to protect information systems against, or effectively respond to, a cybersecurity incident, other disruption or data leak;

●

our ability to successfully implement our sustainability initiatives and achieve our sustainability goals, and changes to environmental laws and regulations;

●

other factors that affect the food industry generally, including:

orecalls if products become adulterated or misbranded, liability if product consumption causes injury, ingredient disclosure and labeling laws and regulations and the possibility that consumers could lose confidence in the safety and quality of certain food products;

ocompetitors’ pricing practices and promotional spending levels;

ofluctuations in the level of our customers’ inventories and credit and other business risks related to our customers operating in a challenging economic and competitive environment; and

othe risks associated with third-party suppliers and co-packers, including the risk that any failure by one or more of our third-party suppliers or co-packers to comply with food safety or other laws and regulations may disrupt our supply of raw materials or certain finished goods products or injure our reputation; and

●

other factors discussed elsewhere in this report and in our other public filings with the Securities and Exchange Commission (SEC), including under Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K filed with the SEC on February 28, 2023, and Part, II, Item 1A, “Risk Factors,” in this report.

Developments in any of these areas could cause our results to differ materially from results that have been or may be projected by us or on our behalf.

All forward-looking statements included in this report are based on information available to us on the date of this report. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this report.

We caution that the foregoing list of important factors is not exclusive. There may be other factors that may cause our actual results to differ materially from the forward-looking statements in this report, including factors disclosed under the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties. We urge investors not to unduly rely on forward-looking statements contained in this report.

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PART I

FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

B&G Foods, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)


	September 30,		December 31,
	2023		2022
Assets
Current assets:
Cash and cash equivalents	$	359,926	$	45,442
Trade accounts receivable, net		154,679		150,019
Inventories		644,060		726,468
Assets held for sale		68,823		51,314
Prepaid expenses and other current assets		44,123		37,550
Income tax receivable		9,100		8,024
Total current assets		1,280,711		1,018,817

Property, plant and equipment, net of accumulated depreciation of $413,352 and $390,821 as of September 30, 2023 and December 31, 2022, respectively		302,572		317,587
Operating lease right-of-use assets		68,688		65,809
Finance lease right-of-use assets		2,097		2,891
Goodwill		619,221		619,241
Other intangible assets, net		1,653,008		1,788,157
Other assets		20,262		19,088
Deferred income taxes		10,291		10,019
Total assets	$	3,956,850	$	3,841,609

Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable	$	182,191	$	127,809
Accrued expenses		72,380		64,137
Current portion of operating lease liabilities		15,213		14,616
Current portion of finance lease liabilities		1,063		1,046
Current portion of long-term debt		555,439		50,000
Income tax payable		1,704		309
Dividends payable		14,938		13,617
Total current liabilities		842,928		271,534

Long-term debt, net of current portion		1,929,144		2,339,049
Deferred income taxes		268,903		288,712
Long-term operating lease liabilities, net of current portion		53,785		51,727
Long-term finance lease liabilities, net of current portion		996		1,795
Other liabilities		20,455		20,626
Total liabilities		3,116,211		2,973,443
Commitments and contingencies (Note 12)

Stockholders’ equity:
Preferred stock, $0.01 par value per share. Authorized 1,000,000 shares; no shares issued or outstanding		—		—
Common stock, $0.01 par value per share. Authorized 125,000,000 shares; 78,624,419 and 71,668,144 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		786		717
Additional paid-in capital		60,455		—
Accumulated other comprehensive loss		(3,117)		(9,349)
Retained earnings		782,515		876,798
Total stockholders’ equity		840,639		868,166
Total liabilities and stockholders’ equity	$	3,956,850	$	3,841,609

See Notes to Consolidated Financial Statements.

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B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)


	Thirteen Weeks Ended				Thirty-nine Weeks Ended
	September 30,		October 1,		September 30,		October 1,
	2023		2022		2023		2022
Net sales	$	502,734	$	528,396	$	1,484,185	$	1,539,768
Cost of goods sold		388,896		422,635		1,153,835		1,256,222
Gross profit		113,838		105,761		330,350		283,546

Operating (income) and expenses:
Selling, general and administrative expenses		48,197		47,519		142,798		138,556
Amortization expense		5,197		5,427		15,649		16,009
Loss (gain) on sales of assets		—		—		85		(7,099)
Impairment of assets held for sale		132,949		103,625		132,949		103,625
Operating income (loss)		(72,505)		(50,810)		38,869		32,455

Other (income) and expenses:
Interest expense, net		35,859		31,874		111,108		88,617
Other income		(962)		(1,846)		(2,819)		(5,533)
Loss before income tax benefit		(107,402)		(80,838)		(69,420)		(50,629)
Income tax benefit		(24,661)		(21,255)		(647)		(14,958)
Net loss	$	(82,741)	$	(59,583)	$	(68,773)	$	(35,671)

Weighted average shares outstanding:
Basic		74,428		71,670		72,815		70,068
Diluted		74,428		72,018		72,815		70,440

Loss per share:
Basic	$	(1.11)	$	(0.83)	$	(0.94)	$	(0.51)
Diluted	$	(1.11)	$	(0.83)	$	(0.94)	$	(0.51)

Cash dividends declared per share	$	0.190	$	0.475	$	0.570	$	1.425

See Notes to Consolidated Financial Statements.

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B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)


	Thirteen Weeks Ended				Thirty-nine Weeks Ended
	September 30,		October 1,		September 30,		October 1,
	2023		2022		2023		2022
Net loss	$	(82,741)	$	(59,583)	$	(68,773)	$	(35,671)

Other comprehensive income (loss):
Foreign currency translation adjustments		(3,492)		(5,492)		6,247		(6,534)
Pension (loss) gain, net of tax		(9)		20		(15)		61
Other comprehensive income (loss)		(3,501)		(5,472)		6,232		(6,473)
Comprehensive loss	$	(86,242)	$	(65,055)	$	(62,541)	$	(42,144)

See Notes to Consolidated Financial Statements.

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B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

As of September 30, 2023

(In thousands, except share and per share data)

(Unaudited)


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Retained		Stockholders’
	Shares	Amount		Capital		Loss		Earnings		Equity
Balance at December 31, 2022	71,668,144	$	717	$	—	$	(9,349)	$	876,798	$	868,166
Foreign currency translation	—		—		—		5,160		—		5,160
Net income	—		—		—		—		3,415		3,415
Share-based compensation	—		—		664		—		—		664
Issuance of common stock for share-based compensation	557,558		5		(1,666)		—		—		(1,661)
Cancellation of restricted stock for tax withholding upon vesting	(13,488)		—		(205)		—		—		(205)
Cancellation of restricted stock upon forfeiture	(414)		—		—		—		—		—
Dividends declared on common stock, $0.19 per share	—		—		1,207		—		(14,927)		(13,720)
Balance at April 1, 2023	72,211,800	$	722	$	—	$	(4,189)	$	865,286	$	861,819
Foreign currency translation	—		—		—		4,579		—		4,579
Change in pension benefit (net of $5 of income taxes)	—		—		—		(6)		—		(6)
Net income	—		—		—		—		10,553		10,553
Share-based compensation	—		—		3,166		—		—		3,166
Issuance of common stock for share-based compensation	82,917		1		(1)		—		—		—
Cancellation of restricted stock for tax withholding upon vesting	(960)		—		(13)		—		—		(13)
Cancellation of restricted stock upon forfeiture	(2,184)		—		—		—		—		—
Dividends declared on common stock, $0.19 per share	—		—		(3,152)		—		(10,583)		(13,735)
Balance at July 1, 2023	72,291,573	$	723	$	—	$	384	$	865,256	$	866,363
Foreign currency translation	—		—		—		(3,492)		—		(3,492)
Change in pension benefit (net of $3 of income taxes)	—		—		—		(9)		—		(9)
Net loss	—		—		—		—		(82,741)		(82,741)
Share-based compensation	—		—		1,887		—		—		1,887
Issuance of common stock in ATM offering	6,332,846		63		73,506		—		—		73,569
Dividends declared on common stock, $0.19 per share	—		—		(14,938)		—		—		(14,938)
Balance at September 30, 2023	78,624,419	$	786	$	60,455	$	(3,117)	$	782,515	$	840,639

See Notes to Consolidated Financial Statements.

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B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

As of October 1, 2022

(In thousands, except share and per share data)

(Unaudited)


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Retained		Stockholders’
	Shares	Amount		Capital		Loss		Earnings		Equity
Balance at January 1, 2022	68,521,651	$	685	$	3,547	$	(18,169)	$	934,191	$	920,254
Foreign currency translation	—		—		—		2,679		—		2,679
Change in pension benefit (net of $7 of income taxes)	—		—		—		21		—		21
Net income	—		—		—		—		23,656		23,656
Share-based compensation	—		—		791		—		—		791
Issuance of common stock for share-based compensation	261,014		3		(3,707)		—		—		(3,704)
Cancellation of restricted stock for tax withholding upon vesting	(10,871)		—		(298)		—		—		(298)
Cancellation of restricted stock upon forfeiture	(573)		—		—		—		—		—
Issuance of common stock in ATM offering	112,353		1		3,227		—		—		3,228
Stock options exercised	2,227		—		60		—		—		60
Dividends declared on common stock, $0.475 per share	—		—		(3,620)		—		(29,101)		(32,721)
Balance at April 2, 2022	68,885,801	$	689	$	—	$	(15,469)	$	928,746	$	913,966
Foreign currency translation	—		—		—		(3,721)		—		(3,721)
Change in pension benefit (net of $6 of income taxes)	—		—		—		20		—		20
Net income	—		—		—		—		256		256
Share-based compensation	—		—		1,924		—		—		1,924
Issuance of common stock for share-based compensation	47,335		—		—		—		—		—
Cancellation of restricted stock for tax withholding upon vesting	(1,250)		—		(28)		—		—		(28)
Cancellation of restricted stock upon forfeiture	(1,108)		—		—		—		—		—
Issuance of common stock in ATM offering	2,739,568		28		61,780		—		—		61,808
Dividends declared on common stock, $0.475 per share	—		—		(34,044)		—		—		(34,044)
Balance at July 2, 2022	71,670,346	$	717	$	29,632	$	(19,170)	$	929,002	$	940,181
Foreign currency translation	—		—		—		(5,492)		—		(5,492)
Change in pension benefit (net of $7 of income taxes)	—		—		—		20		—		20
Net loss	—		—		—		—		(59,583)		(59,583)
Share-based compensation	—		—		472		—		—		472
Cancellation of restricted stock for tax withholding upon vesting	(468)		—		(11)		—		—		(11)
Cancellation of restricted stock upon forfeiture	(1,067)		—		—		—		—		—
Issuance of common stock in ATM offering	1,421		—		31		—		—		31
Dividends declared on common stock, $0.475 per share	—		—		(30,124)		—		(3,920)		(34,044)
Balance at October 1, 2022	71,670,232	$	717	$	—	$	(24,642)	$	865,499	$	841,574

See Notes to Consolidated Financial Statements.

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B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Thirty-nine Weeks Ended
	September 30,		October 1,
	2023		2022
Cash flows from operating activities:
Net loss	$	(68,773)	$	(35,671)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		52,586		61,065
Amortization of operating lease right-of-use assets		13,325		12,539
Amortization of deferred debt financing costs and bond discount/premium		5,691		3,530
Deferred income taxes		(18,940)		(27,415)
Impairment of assets held for sale		132,949		103,625
Loss (gain) on sales of assets		775		(7,094)
Gain on extinguishment of debt		(1,368)		—
Share-based compensation expense		5,452		2,984
Changes in assets and liabilities, net of effects of businesses acquired:
Trade accounts receivable		(4,634)		(31,876)
Inventories		3,316		(206,704)
Prepaid expenses and other current assets		(5,446)		(8,926)
Income tax receivable/payable, net		524		(10,154)
Other assets		(1,104)		(1,379)
Trade accounts payable		52,291		101,108
Accrued expenses		(10,770)		(5,856)
Other liabilities		(193)		1,816
Net cash provided by (used in) operating activities		155,681		(48,408)

Cash flows from investing activities:
Capital expenditures		(16,946)		(17,421)
Proceeds from sales of assets		51,652		10,430
Payments for acquisition of businesses, net of cash acquired		—		(27,290)
Net cash provided by (used in) investing activities		34,706		(34,281)

Cash flows from financing activities:
Repurchases of senior notes		(42,900)		—
Repayments of borrowings under term loan facility		(121,000)		—
Proceeds from issuance of senior secured notes		550,000		—
Repayments of borrowings under revolving credit facility		(422,500)		(182,500)
Borrowings under revolving credit facility		140,000