B&G Foods, Inc. [BGS] Filings

10-Q 1 bgs-20221001x10q.htm 10-Q

As filed with the Securities and Exchange Commission on November 9, 2022

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 October 1, 2022 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 October 28, 2022, the registrant had 71,668,144 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 Income (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	25
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	42
	Item 4. Controls and Procedures	43

PART II OTHER INFORMATION		44

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

SIGNATURE		46

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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:

●

the ultimate impact the COVID-19 pandemic will have on our business, which will depend on many factors, including, without limitation,

o

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;

o

the duration of social distancing and stay-at-home and work-from-home mandates, policies and recommendations, and whether, and the extent to which, additional waves or variants of COVID-19 will affect the United States and the rest of North America; and

o

the extent to which macroeconomic conditions resulting from the pandemic and the pace of the subsequent recovery may impact consumer eating and shopping habits;

●

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;

●

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, U.S. Tax Cuts and Jobs Act and the U.S. CARES Act, and any future tax reform or legislation; for example, President Joe Biden has set forth several tax proposals that may affect B&G Foods;

●

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;

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●

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;

●

future impairments of our goodwill and intangible assets;

●

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

●

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

●

our ability to successfully transition the operations of our Portland, Maine manufacturing facility to third-party co-manufacturing facilities and existing B&G Foods manufacturing facilities without significant disruption in production or customer service, and our ability to achieve anticipated productivity improvements and cost savings;

●

our ability to find a buyer for the Back to Nature business and successfully complete a sale of the business for net sale proceeds sufficient to avoid a further impairment of the assets held for sale or a loss on the sale of assets;

●

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 March 1, 2022, 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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Table of Contents

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)


	October 1,		January 1,
	2022		2022
Assets
Current assets:
Cash and cash equivalents	$	60,064	$	33,690
Trade accounts receivable, net		175,702		145,281
Inventories		805,188		609,794
Assets held for sale		54,245		3,256
Prepaid expenses and other current assets		42,401		38,151
Income tax receivable		11,817		4,284
Total current assets		1,149,417		834,456

Property, plant and equipment, net of accumulated depreciation of $375,797 and $364,182 as of October 1, 2022 and January 1, 2022, respectively		325,890		341,471
Operating lease right-of-use assets		69,565		65,166
Finance lease right-of-use assets		3,155		—
Goodwill		619,095		644,871
Other intangible assets, net		1,793,034		1,927,119
Other assets		14,004		6,916
Deferred income taxes		9,414		8,546
Total assets	$	3,983,574	$	3,828,545

Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable	$	228,248	$	129,861
Accrued expenses		72,677		66,901
Current portion of operating lease liabilities		15,038		12,420
Current portion of finance lease liabilities		1,040		—
Income tax payable		3		2,557
Dividends payable		34,043		32,548
Total current liabilities		351,049		244,287

Long-term debt		2,418,090		2,267,759
Deferred income taxes		284,038		310,641
Long-term operating lease liabilities, net of current portion		55,032		55,607
Long-term finance lease liabilities, net of current portion		2,058		—
Other liabilities		31,733		29,997
Total liabilities		3,142,000		2,908,291
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; 71,670,232 and 68,521,651 shares issued and outstanding as of October 1, 2022 and January 1, 2022, respectively		717		685
Additional paid-in capital		—		3,547
Accumulated other comprehensive loss		(24,642)		(18,169)
Retained earnings		865,499		934,191
Total stockholders’ equity		841,574		920,254
Total liabilities and stockholders’ equity	$	3,983,574	$	3,828,545

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
	October 1,		October 2,		October 1,		October 2,
	2022		2021		2022		2021
Net sales	$	528,396	$	514,965	$	1,539,768	$	1,484,474
Cost of goods sold		422,635		409,300		1,256,222		1,149,425
Gross profit		105,761		105,665		283,546		335,049

Operating (income) and expenses:
Selling, general and administrative expenses		47,519		46,409		138,556		143,864
Amortization expense		5,427		5,396		16,009		16,231
Gain on sales of assets		—		—		(7,099)		—
Impairment of assets held for sale		103,625		—		103,625		—
Operating income (loss)		(50,810)		53,860		32,455		174,954

Other (income) and expenses:
Interest expense, net		31,874		26,630		88,617		80,312
Other income		(1,846)		(1,130)		(5,533)		(3,338)
Income (loss) before income tax expense (benefit)		(80,838)		28,360		(50,629)		97,980
Income tax expense (benefit)		(21,255)		7,613		(14,958)		25,804
Net income (loss)	$	(59,583)	$	20,747	$	(35,671)	$	72,176

Weighted average shares outstanding:
Basic		71,670		64,845		70,068		64,735
Diluted		72,018		65,493		70,440		65,371

Earnings (loss) per share:
Basic	$	(0.83)	$	0.32	$	(0.51)	$	1.11
Diluted	$	(0.83)	$	0.32	$	(0.51)	$	1.10

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

See Notes to Consolidated Financial Statements.

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B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(Unaudited)


	Thirteen Weeks Ended				Thirty-nine Weeks Ended
	October 1,		October 2,		October 1,		October 2,
	2022		2021		2022		2021
Net income (loss)	$	(59,583)	$	20,747	$	(35,671)	$	72,176

Other comprehensive income (loss):
Foreign currency translation adjustments		(5,492)		(4,153)		(6,534)		(753)
Amortization of unrecognized prior service cost and pension deferrals, net of tax		20		304		61		942
Other comprehensive income (loss)		(5,472)		(3,849)		(6,473)		189
Comprehensive income (loss)	$	(65,055)	$	16,898	$	(42,144)	$	72,365

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
Net 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
Net 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
Net issuance of common stock for share-based compensation	—		—		—		—		—		—
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 Changes in Stockholders’ Equity

As of October 2, 2021

(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 2, 2021	64,252,859	$	643	$	—	$	(35,594)	$	866,828	$	831,877
Foreign currency translation	—		—		—		(496)		—		(496)
Change in pension benefit (net of $108 of income taxes)	—		—		—		334		—		334
Net income	—		—		—		—		26,878		26,878
Share-based compensation	—		—		432		—		—		432
Net issuance of common stock for share-based compensation	82,214		1		(1,087)		—		—		(1,086)
Cancellation of restricted stock for tax withholding upon vesting	(21,462)		—		(620)		—		—		(620)
Stock options exercised	438,900		4		14,048		—		—		14,052
Dividends declared on common stock, $0.475 per share	—		—		(12,773)		—		(17,984)		(30,757)
Balance at April 3, 2021	64,752,511	$	648	$	—	$	(35,756)	$	875,722	$	840,614
Foreign currency translation	—		—		—		3,896		—		3,896
Change in pension benefit (net of $99 of income taxes)	—		—		—		304		—		304
Net income	—		—		—		—		24,551		24,551
Share-based compensation	—		—		2,305		—		—		2,305
Net issuance of common stock for share-based compensation	46,377		—		—		—		—		—
Cancellation of restricted stock for tax withholding upon vesting	(66)		—		(3)		—		—		(3)
Cancellation of restricted stock upon forfeiture	(956)		—		—		—		—		—
Stock options exercised	27,212		—		730		—		—		730
Dividends declared on common stock, $0.475 per share	—		—		(3,032)		—		(27,760)		(30,792)
Balance at July 3, 2021	64,825,078	$	648	$	—	$	(31,556)	$	872,513	$	841,605
Foreign currency translation	—		—		—		(4,153)		—		(4,153)
Change in pension benefit (net of $99 of income taxes)	—		—		—		304		—		304
Net income	—		—		—		—		20,747		20,747
Share-based compensation	—		—		804		—		—		804
Net issuance of common stock for share-based compensation	—		—		—		—		—		—
Issuance of common stock in ATM offering	70,791		1		2,111		—		—		2,112
Stock options exercised	1,040		—		29		—		—		29
Dividends declared on common stock, $0.475 per share	—		—		(2,944)		—		(27,882)		(30,826)
Balance at October 2, 2021	64,896,909	$	649	$	—	$	(35,405)	$	865,378	$	830,622

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
	October 1,		October 2,
	2022		2021
Cash flows from operating activities:
Net income (loss)	$	(35,671)	$	72,176
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		61,065		61,257
Amortization of operating lease right-of-use assets		12,539		9,901
Amortization of deferred debt financing costs and bond discount/premium		3,530		3,444
Deferred income taxes		(27,415)		14,894
Impairment of assets held for sale		103,625		—
Gain on sales of assets		(7,094)		—
Share-based compensation expense		2,984		3,228
Changes in assets and liabilities, net of effects of businesses acquired:
Trade accounts receivable		(31,876)		(46,702)
Inventories		(206,704)		(177,785)
Prepaid expenses and other current assets		(8,926)		(1,559)
Income tax receivable/payable, net		(10,154)		8,705
Other assets		(1,379)		(746)
Trade accounts payable		101,108		83,530
Accrued expenses		(5,856)		(32,921)
Other liabilities		1,816		15,364
Net cash (used in) provided by operating activities		(48,408)		12,786

Cash flows from investing activities:
Capital expenditures		(17,421)		(31,679)
Proceeds from sales of assets		10,430		632
Payments for acquisition of businesses, net of cash acquired		(27,290)		—
Net cash used in investing activities		(34,281)		(31,047)

Cash flows from financing activities:
Repayments of borrowings under revolving credit facility		(182,500)		(85,000)
Borrowings under revolving credit facility		330,000		155,000
Proceeds from issuance of common stock, net		65,233		2,112
Dividends paid		(99,312)		(92,069)
Proceeds from exercise of stock options		60		14,811
Payments of tax withholding on behalf of employees for net share settlement of share-based compensation		(4,041)		(1,708)
Payments of debt financing costs		—		(276)
Net cash provided by (used in) financing activities		109,440		(7,130)

Effect of exchange rate fluctuations on cash and cash equivalents		(377)		271
Net increase (decrease) in cash and cash equivalents		26,374		(25,120)

Cash and cash equivalents at beginning of period		33,690		52,182
Cash and cash equivalents at end of period	$	60,064	$	27,062

Supplemental disclosures of cash flow information:
Cash interest payments	$	79,891	$	95,771
Cash income tax payments	$	22,908	$	2,155
Non-cash investing and financing transactions:
Dividends declared and not yet paid	$	34,043	$	30,826
Accruals related to purchases of property, plant and equipment	$	1,197	$	1,803
Right-of-use assets obtained in exchange for new operating lease liabilities	$	2,851	$