UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark one)
Quarterly Report Pursuant to Section 13 or 15(d) |
For the quarterly period ended or | |
Transition Report Pursuant to Section 13 or 15(d) |
For the transition period from to .
Commission file number
(Exact name of Registrant as specified in its charter)
(State or other jurisdiction of | (I.R.S. Employer Identification No.) | |
incorporation or organization) | ||
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered |
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.
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).
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.
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
As of April 29, 2022, the registrant had
B&G Foods, Inc. and Subsidiaries
Index
- 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, |
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 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; |
● | other factors that affect the food industry generally, including: |
● | 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)
April 2, |
| January 1, | |||
2022 |
| 2022 | |||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ | | $ | | |
Trade accounts receivable, net |
| |
| | |
Inventories |
| |
| | |
Assets held for sale | — | | |||
Prepaid expenses and other current assets |
| |
| | |
Income tax receivable |
| |
| | |
Total current assets |
| |
| | |
Property, plant and equipment, net of accumulated depreciation of $ |
| |
| | |
Operating lease right-of-use assets | | | |||
Goodwill |
| |
| | |
Other intangible assets, net |
| |
| | |
Other assets |
| |
| | |
Deferred income taxes |
| |
| | |
Total assets | $ | | $ | | |
Liabilities and Stockholders’ Equity | |||||
Current liabilities: | |||||
Trade accounts payable | $ | | $ | | |
Accrued expenses |
| |
| | |
Current portion of operating lease liabilities | | | |||
Income tax payable | | | |||
Dividends payable |
| |
| | |
Total current liabilities |
| |
| | |
Long-term debt |
| |
| | |
Deferred income taxes |
| |
| | |
Long-term operating lease liabilities, net of current portion | | | |||
Other liabilities |
| |
| | |
Total liabilities |
| |
| | |
Commitments and contingencies (Note 12) | |||||
Stockholders’ equity: | |||||
Preferred stock, $ |
|
| |||
Common stock, $ |
| |
| | |
Additional paid-in capital |
| — |
| | |
Accumulated other comprehensive loss |
| ( |
| ( | |
Retained earnings |
| |
| | |
Total stockholders’ equity |
| |
| | |
Total liabilities and stockholders’ equity | $ | | $ | |
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 | |||||
April 2, |
| April 3, | |||
2022 |
| 2021 | |||
Net sales | $ | | $ | | |
Cost of goods sold |
| |
| | |
Gross profit |
| |
| | |
Operating (income) and expenses: | |||||
Selling, general and administrative expenses |
| |
| | |
Amortization expense |
| |
| | |
Gain on sales of assets |
| ( |
| — | |
Operating income |
| |
| | |
Other income and expenses: | |||||
Interest expense, net |
| |
| | |
Other income | ( | ( | |||
Income before income tax expense |
| |
| | |
Income tax expense |
| |
| | |
Net income | $ | | $ | | |
Weighted average shares outstanding: | |||||
Basic | | | |||
Diluted | | | |||
Earnings per share: | |||||
Basic | $ | | $ | | |
Diluted | $ | | $ | | |
Cash dividends declared per share | $ | | $ | |
See Notes to Consolidated Financial Statements.
- 2 -
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)
Thirteen Weeks Ended | ||||||
| April 2, |
| April 3, | |||
| 2022 |
| 2021 | |||
Net income | $ | | $ | | ||
Other comprehensive income (loss): | ||||||
Foreign currency translation adjustments |
| |
| ( | ||
Amortization of unrecognized prior service cost and pension deferrals, net of tax |
| |
| | ||
Other comprehensive income (loss) |
| |
| ( | ||
Comprehensive income | $ | | $ | |
See Notes to Consolidated Financial Statements.
- 3 -
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity
As of April 2, 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 |
| | $ | | $ | | $ | ( | $ | | $ | | |||||
Foreign currency translation |
| — | — | — | | — |
| | |||||||||
Change in pension benefit (net of $ |
| — | — | — | | — |
| | |||||||||
Net income |
| — | — | — | — | |
| | |||||||||
Share-based compensation |
| — | — | | — | — |
| | |||||||||
Net issuance of common stock for share-based compensation |
| | | ( | — | — |
| ( | |||||||||
Cancellation of restricted stock for tax withholding upon vesting | ( | — | ( | — | — | ( | |||||||||||
Cancellation of restricted stock upon forfeiture | ( | — | — | — | — |
| — | ||||||||||
Issuance of common stock in ATM offering | | | | — | — | | |||||||||||
Stock options exercised | | — | | — | — | | |||||||||||
Dividends declared on common stock, $ |
| — | — | ( | — | ( |
| ( | |||||||||
Balance at April 2, 2022 |
| | $ | | $ | — | $ | ( | $ | | $ | |
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity
As of April 3, 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 |
| | $ | | $ | — | $ | ( | $ | | $ | | |||||
Foreign currency translation |
| — | — | — | ( | — |
| ( | |||||||||
Change in pension benefit (net of $ |
| — | — | — | | — |
| | |||||||||
Net income |
| — | — | — | — | |
| | |||||||||
Share-based compensation |
| — | — | | — | — |
| | |||||||||
Net issuance of common stock for share-based compensation |
| | | ( | — | — |
| ( | |||||||||
Cancellation of restricted stock for tax withholding upon vesting | ( | — | ( | — | — | ( | |||||||||||
Stock options exercised | | | | — | — | | |||||||||||
Dividends declared on common stock, $ |
| — | — | ( | — | ( |
| ( | |||||||||
Balance at April 3, 2021 |
| | $ | | $ | — | $ | ( | $ | | $ | |
See Notes to Consolidated Financial Statements.
- 4 -
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Thirteen Weeks Ended | ||||||
| April 2, |
| April 3, | |||
| 2022 |
| 2021 | |||
Cash flows from operating activities: | ||||||
Net income | $ | | $ | | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization |
| |
| | ||
Amortization of operating lease right-of-use assets | | | ||||
Amortization of deferred debt financing costs and bond discount/premium |
| |
| | ||
Deferred income taxes |
| |
| | ||
Gain on sales of assets | ( | ( | ||||
Share-based compensation expense |
| |
| | ||
Changes in assets and liabilities, net of effects of businesses acquired: | ||||||
Trade accounts receivable |
| ( |
| ( | ||
Inventories |
| ( |
| ( | ||
Prepaid expenses and other current assets |
| ( |
| | ||
Income tax receivable/payable |
| |
| | ||
Other assets |
| ( |
| ( | ||
Trade accounts payable |
| |
| | ||
Accrued expenses |
| ( |
| ( | ||
Other liabilities |
| |
| | ||
Net cash provided by operating activities |
| |
| | ||
Cash flows from investing activities: | ||||||
Capital expenditures |
| ( |
| ( | ||
Proceeds from sales of assets | | | ||||
Net cash provided by (used in) investing activities |
| |
| ( | ||
Cash flows from financing activities: | ||||||
Repayments of borrowings under revolving credit facility |
| ( |
| ( | ||
Borrowings under revolving credit facility |
| |
| | ||
Proceeds from issuance of common stock, net |
| |
| — | ||
Dividends paid |
| ( |
| ( | ||
Proceeds from exercise of stock options | | | ||||
Payments of tax withholding on behalf of employees for net share settlement of share-based compensation |
| ( |
| ( | ||
Payments of debt financing costs | — | ( | ||||
Net cash used in financing activities |
| ( |
| ( | ||
Effect of exchange rate fluctuations on cash and cash equivalents |
| |
| | ||
Net increase (decrease) in cash and cash equivalents |
| |
| ( | ||
Cash and cash equivalents at beginning of period |
| |
| | ||
Cash and cash equivalents at end of period | $ | | $ | | ||
Supplemental disclosures of cash flow information: | ||||||
Cash interest payments | $ | | $ | | ||
Cash income tax payments | $ | | $ | | ||
Non-cash investing and financing transactions: | ||||||
Dividends declared and not yet paid | $ | | $ | | ||
Accruals related to purchases of property, plant and equipment | $ | | $ | | ||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | | $ | |
See Notes to Consolidated Financial Statements.
- 5 -
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
(1) | Nature of Operations |
B&G Foods, Inc. is a holding company whose principal assets are the shares of capital stock of its subsidiaries. Unless the context requires otherwise, references in this report to “B&G Foods,” “our company,” “we,” “us” and “our” refer to B&G Foods, Inc. and its subsidiaries. Our financial statements are presented on a consolidated basis.
We operate in a single industry segment and manufacture, sell and distribute a diverse portfolio of high-quality shelf-stable and frozen foods across the United States, Canada and Puerto Rico. Our products include frozen and canned vegetables, vegetable, canola and other cooking oils, vegetable shortening, cooking sprays, oatmeal and other hot cereals, fruit spreads, canned meats and beans, bagel chips, spices, seasonings, hot sauces, wine vinegar, maple syrup, molasses, salad dressings, pizza crusts, Mexican-style sauces, dry soups, taco shells and kits, salsas, pickles, peppers, tomato-based products, cookies and crackers, baking powder, baking soda, corn starch, nut clusters and other specialty products. Our products are marketed under many recognized brands, including Ac’cent, B&G, B&M, Back to Nature, Baker’s Joy, Bear Creek Country Kitchens, Brer Rabbit, Canoleo, Cary’s, Clabber Girl, Cream of Rice, Cream of Wheat, Crisco, Dash, Davis, Devonsheer, Don Pepino, Durkee, Emeril’s, Grandma’s Molasses, Green Giant, Joan of Arc, Las Palmas, Le Sueur, MacDonald’s, Mama Mary’s, Maple Grove Farms of Vermont, McCann’s, Molly McButter, New York Flatbreads, New York Style, Old London, Ortega, Polaner, Red Devil, Regina, Rumford, Sa-són, Sclafani, Spice Islands, Spring Tree, Sugar Twin, Tone’s, Trappey’s, TrueNorth, Underwood, Vermont Maid, Victoria, Weber and Wright’s. We also sell and distribute Static Guard, a household product brand. We compete in the retail grocery, foodservice, specialty, private label, club and mass merchandiser channels of distribution. We sell and distribute our products directly and via a network of independent brokers and distributors to supermarket chains, foodservice outlets, mass merchants, warehouse clubs, non-food outlets and specialty distributors.
(2) | Summary of Significant Accounting Policies |
Fiscal Year
Typically, our fiscal quarters and fiscal year consist of
Basis of Presentation
The accompanying unaudited consolidated interim financial statements for the thirteen week periods ended April 2, 2022 (first quarter of 2022) and April 3, 2021 (first quarter of 2021) have been prepared by our company in accordance with generally accepted accounting principles in the United States (GAAP) pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), and include the accounts of B&G Foods, Inc. and its subsidiaries. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, our management believes, to the best of their knowledge, that the disclosures herein are adequate to make the information presented not misleading. All intercompany balances and transactions have been eliminated. The accompanying unaudited consolidated interim financial statements contain all adjustments that are, in the opinion of management, necessary to present fairly our consolidated financial position as of April 2, 2022, and the results of our operations, comprehensive income, changes in stockholders’ equity and cash flows for the first quarter of 2022 and 2021. Our results of operations for the first quarter of 2022 are not necessarily indicative of the results to be expected for the full year. We have evaluated subsequent events for disclosure through the date of issuance of the accompanying unaudited consolidated interim financial statements. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for fiscal 2021 filed with the SEC on March 1, 2022 (which we refer to as our 2021 Annual Report on Form 10-K).
- 6 -
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
Use of Estimates
The preparation of financial statements in accordance with GAAP requires our management to make a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates and assumptions made by management involve revenue recognition as it relates to trade and consumer promotion expenses; pension benefits; acquisition accounting fair value allocations; the recoverability of goodwill, other intangible assets, property, plant and equipment and deferred tax assets; and the determination of the useful life of customer relationship and finite-lived trademark intangible assets. Actual results could differ significantly from these estimates and assumptions.
Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors that management believes to be reasonable under the circumstances, including the current economic environment. We adjust such estimates and assumptions when facts and circumstances dictate. Volatility in the credit and equity markets can increase the uncertainty inherent in such estimates and assumptions.
Accounting Standards Adopted in Fiscal 2022 or Fiscal 2021
In December 2019, the Financial Accounting Standards Board (FASB) issued a new accounting standards update (ASU) that removes certain exceptions for recognizing deferred taxes for certain investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for goodwill and allocating taxes to members of a consolidated group. This guidance became effective during the first quarter of 2021. The adoption of this ASU did not have a material impact to our consolidated financial statements or related disclosures.
Recently Issued Accounting Standards – Pending Adoption
In October 2021, the FASB issued a new ASU which provides an exception to fair value measurement for revenue contracts acquired in business combinations. This ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2022. We currently expect to adopt the standard during fiscal 2023 for any business combinations that occur in fiscal 2023 or after. Currently, we do not expect the adoption of this ASU to have a material impact to our consolidated financial statements.
In March 2020, the FASB issued a new ASU which provides optional guidance for a limited time to ease the potential accounting burden associated with transitioning away from reference rates such as LIBOR, which is set to cease after June 30, 2023. The update may be applied as of the beginning of the interim period that includes March 12, 2020 through December 31, 2022. We currently expect to adopt the standard during fiscal 2022. We are in the process of evaluating the impact of the adoption of this ASU. LIBOR is used to determine interest under our revolving credit facility and our tranche B term loans due 2026. Currently, however, we do not expect the adoption of this ASU to have a material impact to our consolidated financial statements.
(3) | Acquisitions |
We did not complete any acquisitions during fiscal 2021 or the first quarter of 2022.
(4) | Inventories |
Inventories are stated at the lower of cost or net realizable value and include direct material, direct labor, overhead, warehousing and product transfer costs. Cost is determined using the first-in, first-out and average cost methods. Inventories have been reduced by an allowance for excess, obsolete and unsaleable inventories. The allowance is an estimate based on management’s review of inventories on hand compared to estimated future usage and sales.
- 7 -
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
Inventories consist of the following, as of the dates indicated (in thousands):
| April 2, 2022 |
| January 1, 2022 | |||
Raw materials and packaging | $ | | $ | | ||
Work-in-process | | | ||||
Finished goods |
| |
| | ||
Inventories | $ | | $ |
(5) | Goodwill and Other Intangible Assets |
The carrying amounts of goodwill and other intangible assets, as of the dates indicated, consist of the following (in thousands):
April 2, 2022 | January 1, 2022 | |||||||||||||||||
| Gross Carrying |
| Accumulated |
| Net Carrying |
| Gross Carrying |
| Accumulated |
| Net Carrying | |||||||
| Amount |
| Amortization |
| Amount |
| Amount |
| Amortization |
| Amount | |||||||
Finite-Lived Intangible Assets | ||||||||||||||||||
Trademarks | $ | | $ | | $ | | $ | | $ | | $ | | ||||||
Customer relationships |
| |
| |
| |
| |
| |
| | ||||||
Total finite-lived intangible assets | $ | | $ | | $ | | $ | | $ | | $ | | ||||||
Indefinite-Lived Intangible Assets | ||||||||||||||||||
Goodwill | $ | | $ | | ||||||||||||||
Trademarks | $ | | $ | |
Amortization expense associated with finite-lived intangible assets was $
We did
- 8 -
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
(6) | Long-Term Debt |
Long-term debt consists of the following, as of the dates indicated (in thousands):
| April 2, 2022 |
| January 1, 2022 | |||
Revolving credit loans |
| $ | |
| $ | |
Tranche B term loans due 2026 | | | ||||
| | |||||
| | |||||
Unamortized deferred debt financing costs | ( |
| ( | |||
Unamortized discount/premium |
| ( |
| ( | ||
Total long-term debt, net of unamortized deferred debt financing costs and discount/premium | | |
As of April 2, 2022, the aggregate contractual maturities of long-term debt were as follows (in thousands):
Aggregate Contractual Maturities | ||
Fiscal year: | ||
2022 remaining | $ | — |
2023 |
| — |
2024 |
| — |
2025 |
| |
2026 |
| |
Thereafter |
| |
Total | $ | |
Senior Secured Credit Agreement. Our senior secured credit agreement includes a term loan facility and a revolving credit facility.
On December 16, 2020, we amended our amended and restated credit agreement, dated as of October 2, 2015, and previously amended on March 30, 2017, November 20, 2017 and October 10, 2019. Among other things, the amendment provides for a $
Interest under the tranche B term loan facility is determined based on alternative rates that we may choose in accordance with our credit agreement, including a base rate per annum plus an applicable margin of
The December 2020 amendment also increased the revolver capacity from $
Interest under the revolving credit facility, including any outstanding letters of credit, is determined based on alternative rates that we may choose in accordance with the credit agreement, including a base rate per annum plus an applicable margin ranging from
- 9 -
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
We are required to pay a commitment fee of
We may prepay term loans or permanently reduce the revolving credit facility commitment under the credit agreement at any time without premium or penalty (other than customary “breakage” costs with respect to the early termination of LIBOR loans). Subject to certain exceptions, the credit agreement provides for mandatory prepayment upon certain asset dispositions or casualty events and issuances of indebtedness.
Our obligations under the credit agreement are jointly and severally and fully and unconditionally guaranteed on a senior basis by all of our existing and certain future domestic subsidiaries (other than a domestic subsidiary that is a holding company for one or more foreign subsidiaries). The credit agreement is secured by substantially all of our and our domestic subsidiaries’ assets except our and our domestic subsidiaries’ real property. The credit agreement contains customary restrictive covenants, subject to certain permitted amounts and exceptions, including covenants limiting our ability to incur additional indebtedness, pay dividends and make other restricted payments, repurchase shares of our outstanding stock and create certain liens.
The credit agreement also contains certain financial maintenance covenants, which, among other things, specify a maximum consolidated leverage ratio and a minimum interest coverage ratio, each ratio as defined in the credit agreement. Our consolidated leverage ratio (defined as the ratio, determined on a pro forma basis, of our consolidated net debt, as of the last day of any period of
The credit agreement also provides for an incremental term loan and revolving loan facility, pursuant to which we may request that the lenders under the credit agreement, and potentially other lenders, provide unlimited additional amounts of term loans or revolving loans or both on terms substantially consistent with those provided under the credit agreement. Among other things, the utilization of the incremental facility is conditioned on our ability to meet a maximum senior secured leverage ratio of
We used the net proceeds of the April 2017 offering to repay all of the then outstanding borrowings and amounts due under our revolving credit facility and tranche A term loans, to pay related fees and expenses and for general corporate purposes. We used the net proceeds of the November 2017 offering to repay all of the then outstanding borrowings and amounts due under our revolving credit facility, to pay related fees and expenses and for general corporate purposes.
Interest on the
- 10 -
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
We may redeem some or all of the
We may also, from time to time, seek to retire the
Our obligations under the
The indenture governing the
We used the proceeds of the offering, together with the proceeds of incremental term loans made during the fourth quarter of 2019, to redeem all of our outstanding
Interest on the
We may redeem some or all of the
We may also, from time to time, seek to retire the
Our obligations under the
- 11 -
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
2027 and the subsidiary guarantees are our and the guarantors’ general unsecured obligations and are effectively junior in right of payment to all of our and the guarantors’ secured indebtedness and to all existing and future indebtedness and other liabilities of our non-guarantor subsidiaries; are pari passu in right of payment to all of our and the guarantors’ existing and future unsecured senior debt; and are senior in right of payment to all of our and the guarantors’ future subordinated debt. Our foreign subsidiaries are not guarantors, and any future foreign or partially owned domestic subsidiaries will not be guarantors, of the
The indenture governing the
Subsidiary Guarantees. We have no assets or operations independent of our direct and indirect subsidiaries. All of our present domestic subsidiaries jointly and severally and fully and unconditionally guarantee our long-term debt. There are no significant restrictions on our ability and the ability of our subsidiaries to obtain funds from our respective subsidiaries by dividend or loan. See Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Supplemental Financial Information about B&G Foods and Guarantor Subsidiaries.”
Accrued Interest. At April 2, 2022 and January 1, 2022, accrued interest of $
(7) | Fair Value Measurements |
The authoritative accounting literature relating to fair value measurements defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The accounting literature outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and the accounting literature details the disclosures that are required for items measured at fair value. Financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy under the accounting literature. The three levels are as follows:
Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2—Observable inputs other than Level 1 quoted prices, such as quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value driver is observable for the asset or liability, either directly or indirectly.
Level 3—Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.
Cash and cash equivalents, trade accounts receivable, income tax receivable, trade accounts payable, accrued expenses, income tax payable and dividends payable are reflected in the consolidated balance sheets at carrying value, which approximates fair value due to the short-term nature of these instruments.
- 12 -
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
The carrying values and fair values of our revolving credit loans, term loans and senior notes as of April 2, 2022 and January 1, 2022 were as follows (in thousands):
April 2, 2022 | January 1, 2022 |
| |||||||||||
| Carrying Value |
| Fair Value |
| Carrying Value |
| Fair Value |
| |||||
Revolving credit loans | $ | | $ | | (1) | $ | | $ | | (1) | |||
Tranche B term loans due 2026 | | (2) | | (3) | | (2) | | (3) | |||||
| (4) | | (3) | | (4) | | (3) | ||||||
$ | | $ | | (3) | $ | | $ | | (3) |
(1) | Fair values are estimated based on Level 2 inputs, which were quoted prices for identical or similar instruments in markets that are not active. |
(2) | The carrying value of the tranche B term loans includes a discount. At April 2, 2022 and January 1, 2022, the face amount of the tranche B term loans was $ |
(3) | Fair values are estimated based on quoted market prices. |
(4) | The carrying value of the |
There was
(8) | Accumulated Other Comprehensive Loss |
The reclassifications from accumulated other comprehensive loss (AOCL) for the first quarter of 2022 and 2021 were as follows (in thousands):
Amounts Reclassified from AOCL | |||||||
Thirteen Weeks Ended | Affected Line Item in | ||||||
April 2, |
| April 3, | the Statement Where | ||||
Details about AOCL Components | 2022 |
| 2021 |
| Net Income is Presented | ||
Defined benefit pension plan items | |||||||
Amortization of unrecognized loss | $ | | $ | | See (1) below | ||
Accumulated other comprehensive loss before tax |
| |
| | Total before tax | ||
Tax expense |
| ( |
| ( | Income tax expense | ||
Total reclassification | $ | | $ | | Net of tax |
(1) | These items are included in the computation of net periodic pension cost. See Note 10, “Pension Benefits,” for additional information. |
Changes in AOCL for the first quarter of 2022 were as follows (in thousands):
Foreign Currency | |||||||||
Defined Benefit | Translation | ||||||||
| Pension Plan Items |
| Adjustments |
| Total | ||||
Balance at January 1, 2022 |
| $ | ( |
| $ | ( |
| $ | ( |
Other comprehensive income before reclassifications |
| — |
| |
| | |||
Amounts reclassified from AOCL |
| |
| — |
| | |||
Net current period other comprehensive income |
| |
| |
| | |||
Balance at April 2, 2022 |
| $ | ( |
| $ | ( |
| $ | ( |
- 13 -
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
(9)Stockholders’ Equity
Stock Repurchase Program. On March 9, 2021, our board of directors authorized an extension of our stock repurchase program from March 15, 2021 to March 15, 2022. In extending the repurchase program, our board of directors also reset the repurchase authority to up to $
We did
At-The-Market Equity Offering Program. On August 23, 2021, we entered into an “at-the-market” (ATM) equity offering sales agreement with BofA Securities, Inc., Barclays Capital Inc., Deutsche Bank Securities Inc., RBC Capital Markets, LLC, BMO Capital Markets Corp., Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, Citizens Capital Markets, Inc., SMBC Nikko Securities America, Inc. and TD Securities (USA) LLC, as sales agents to sell up to
During fiscal 2021, we sold
During the first quarter of 2022, we sold
Future sales of shares, if any, under the ATM equity offering program will be made by means of transactions that are deemed to be “at-the-market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended, including block trades and sales made in ordinary brokers’ transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of the sale, at prices related to prevailing market prices or at negotiated prices. The timing and amount of any sales will be determined by a variety of factors considered by us.
We used the net proceeds from shares sold under the ATM equity offering program during fiscal 2021 and the first quarter of 2022 to repay revolving credit loans, to pay offering fees and expenses, and for general corporate purposes. We intend to use the net proceeds from any future sales of our common stock under the ATM offering for general corporate purposes, which could include, among other things, repayment, refinancing, redemption or repurchase of long-term debt or possible acquisitions.
- 14 -
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
(10) | Pension Benefits |
Company-Sponsored Defined Benefit Pension Plans. As of April 2, 2022, we had
Thirteen Weeks Ended | |||||
April 2, | April 3, | ||||
2022 |
| 2021 | |||
Service cost—benefits earned during the period | $ | | $ | ||
Interest cost on projected benefit obligation |
| |
| ||
Expected return on plan assets |
| ( |
| ( | |
Amortization of unrecognized loss |
| |
| | |
Net periodic pension cost | $ | | $ | |
During the first quarter of 2022 and 2021, we did not make any contributions to our company-sponsored defined benefit pension plans. During the remainder of fiscal 2022, we expect to make approximately $
Multi-Employer Defined Benefit Pension Plan. Prior to the closure of our Portland, Maine manufacturing facility during the fourth quarter of 2021, we also contributed to the Bakery and Confectionery Union and Industry International Pension Fund (EIN 52-6118572, Plan No. 001), a multi-employer defined benefit pension plan, sponsored by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) on behalf of certain employees at our Portland, Maine manufacturing facility. The plan provides multiple plan benefits with corresponding contribution rates that are collectively bargained between participating employers and their affiliated BCTGM local unions.
B&G Foods made contributions to the plan of approximately $
In connection with the closure and sale of the Portland, Maine manufacturing facility, we withdrew from participation in the plan during the fourth quarter of 2021. As a result, we are required to make monthly withdrawal liability payments to the plan over
- 15 -
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
(11) | Leases |
Operating Leases.
April 2, |
| January 1, | |||
2022 |
| 2022 | |||
Right-of-use assets: | |||||
Operating lease right-of-use assets | $ | | $ | | |
Operating lease liabilities: | |||||
Current portion of operating lease liabilities | $ | | $ | | |
Long-term operating lease liabilities, net of current portion | | | |||
Total operating lease liabilities | $ | | $ | |
We determine whether an arrangement is a lease at inception. We have operating leases for certain of our manufacturing facilities, distribution centers, warehouse and storage facilities, machinery and equipment, and office equipment. Our leases have remaining lease terms of
The following table shows supplemental information related to leases:
Thirteen Weeks Ended | |||||
April 2, |
| April 3, | |||
2022 |
| 2021 | |||
Operating cash flow information: | |||||
Cash paid for amounts included in the measurement of operating lease liabilities | $ | | $ | | |
The components of lease costs were as follows: | |||||
Cost of goods sold | $ | | $ | | |
Selling, general and administrative expenses | | | |||
Total lease costs | $ | | $ | |
Total rent expense was $
Because our operating leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We have lease agreements that contain both lease and non-lease components. With the exception of our real estate leases, we account for our leases as a single lease component.
- 16 -
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
(Unaudited)