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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.

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

- i -

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,
othe 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;
othe 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
othe 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;

- ii -

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.

- iii -

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.

- 1 -

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.

- 2 -

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.

- 3 -

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.

- 4 -

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.

- 5 -

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

$