B&G Foods, Inc. [BGS] Filings

10-Q 1 bgs-20240629x10q.htm 10-Q

As filed with the Securities and Exchange Commission on August 6, 2024

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 June 29, 2024 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 August 1, 2024, the registrant had 79,163,886 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) Income	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	27
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	41
	Item 4. Controls and Procedures	42

PART II OTHER INFORMATION		43

	Item 1. Legal Proceedings	43
	Item 1A. Risk Factors	43
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	43
	Item 3. Defaults Upon Senior Securities	44
	Item 4. Mine Safety Disclosures	44
	Item 5. Other Information	44
	Item 6. Exhibits	44

SIGNATURE		45

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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, 2024, 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 you 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)


	June 29,		December 30,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	40,323	$	41,094
Trade accounts receivable, net		142,252		143,015
Inventories		559,594		568,980
Prepaid expenses and other current assets		42,803		41,747
Income tax receivable		11,604		7,988
Total current assets		796,576		802,824

Property, plant and equipment, net of accumulated depreciation of $446,027 and $426,084 as of June 29, 2024 and December 30, 2023, respectively		287,395		302,288
Operating lease right-of-use assets		64,140		70,046
Finance lease right-of-use assets		1,303		1,832
Goodwill		548,589		619,399
Other intangible assets, net		1,617,047		1,627,836
Other assets		24,768		23,484
Deferred income taxes		11,731		15,581
Total assets	$	3,351,549	$	3,463,290

Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable	$	126,210	$	123,778
Accrued expenses		64,166		83,217
Current portion of operating lease liabilities		17,841		16,939
Current portion of finance lease liabilities		1,082		1,070
Current portion of long-term debt		265,392		22,000
Income tax payable		240		475
Dividends payable		15,041		14,939
Total current liabilities		489,972		262,418

Long-term debt, net of current portion		1,779,034		2,023,088
Deferred income taxes		248,909		267,053
Long-term operating lease liabilities, net of current portion		46,517		53,724
Long-term finance lease liabilities, net of current portion		183		726
Other liabilities		21,923		20,818
Total liabilities		2,586,538		2,627,827
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; 79,163,886 and 78,624,419 shares issued and outstanding as of June 29, 2024 and December 30, 2023, respectively		792		786
Additional paid-in capital		21,288		46,990
Accumulated other comprehensive (loss) income		(5,858)		2,597
Retained earnings		748,789		785,090
Total stockholders’ equity		765,011		835,463
Total liabilities and stockholders’ equity	$	3,351,549	$	3,463,290

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				Twenty-six Weeks Ended
	June 29,		July 1,		June 29,		July 1,
	2024		2023		2024		2023
Net sales	$	444,590	$	469,637	$	919,813	$	981,451
Cost of goods sold		352,553		367,361		718,895		764,939
Gross profit		92,037		102,276		200,918		216,512

Operating expenses:
Selling, general and administrative expenses		43,128		47,872		91,740		94,601
Amortization expense		5,111		5,211		10,223		10,452
Impairment of goodwill		—		—		70,580		—
Loss on sales of assets		—		—		135		85
Operating income		43,798		49,193		28,240		111,374

Other (income) and expenses:
Interest expense, net		37,808		35,814		75,633		75,249
Other income		(1,046)		(936)		(2,088)		(1,857)
Income (loss) before income tax expense (benefit)		7,036		14,315		(45,305)		37,982
Income tax expense (benefit)		3,098		3,762		(9,004)		24,014
Net income (loss)	$	3,938	$	10,553	$	(36,301)	$	13,968

Weighted average shares outstanding:
Basic		79,083		72,237		78,865		72,008
Diluted		79,389		72,380		78,865		72,087

Earnings (loss) per share:
Basic	$	0.05	$	0.15	$	(0.46)	$	0.19
Diluted	$	0.05	$	0.15	$	(0.46)	$	0.19

Cash dividends declared per share	$	0.19	$	0.19	$	0.38	$	0.38

See Notes to Consolidated Financial Statements.

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B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Comprehensive (Loss) Income

(In thousands)

(Unaudited)


	Thirteen Weeks Ended				Twenty-six Weeks Ended
	June 29,		July 1,		June 29,		July 1,
	2024		2023		2024		2023
Net income (loss)	$	3,938	$	10,553	$	(36,301)	$	13,968

Other comprehensive (loss) income:
Foreign currency translation adjustments		(8,531)		4,579		(8,436)		9,739
Pension loss, net of tax		(11)		(6)		(19)		(6)
Other comprehensive (loss) income		(8,542)		4,573		(8,455)		9,733
Comprehensive (loss) income	$	(4,604)	$	15,126	$	(44,756)	$	23,701

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 June 29, 2024

(In thousands, except share and per share data)

(Unaudited)


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Retained		Stockholders’
	Shares	Amount		Capital		Income		Earnings		Equity
Balance at December 30, 2023	78,624,419	$	786	$	46,990	$	2,597	$	785,090	$	835,463
Foreign currency translation	—		—		—		95		—		95
Change in pension benefit (net of $3 of income taxes)	—		—		—		(8)		—		(8)
Net loss	—		—		—		—		(40,239)		(40,239)
Share-based compensation	—		—		1,519		—		—		1,519
Issuance of common stock for share-based compensation	479,746		6		(6)		—		—		—
Cancellation of restricted stock for tax withholding upon vesting	(51,997)		(1)		(589)		—		—		(590)
Cancellation of restricted stock upon forfeiture	(676)		—		—		—		—		—
Dividends declared on common stock, $0.19 per share	—		—		(15,020)		—		—		(15,020)
Balance at March 30, 2024	79,051,492	$	791	$	32,894	$	2,684	$	744,851	$	781,220
Foreign currency translation	—		—		—		(8,531)		—		(8,531)
Change in pension benefit (net of $3 of income taxes)	—		—		—		(11)		—		(11)
Net income	—		—		—		—		3,938		3,938
Share-based compensation	—		—		3,461		—		—		3,461
Issuance of common stock for share-based compensation	116,532		1		(1)		—		—		—
Cancellation of restricted stock for tax withholding upon vesting	(2,671)		—		(25)		—		—		(25)
Cancellation of restricted stock upon forfeiture	(1,467)		—		—		—		—		—
Tax benefit from net issuance of common stock for share-based compensation	—		—		—		—		—		—
Stock options exercised	—		—		—		—		—		—
Repurchase of common stock	—		—		—		—		—		—
Dividends declared on common stock, $0.19 per share	—		—		(15,041)		—		—		(15,041)
Balance at June 29, 2024	79,163,886	$	792	$	21,288	$	(5,858)	$	748,789	$	765,011

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 July 1, 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

See Notes to Consolidated Financial Statements.

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B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Twenty-six Weeks Ended
	June 29,		July 1,
	2024		2023
Cash flows from operating activities:
Net (loss) income	$	(36,301)	$	13,968
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		34,552		35,304
Amortization of operating lease right-of-use assets		9,480		8,905
Amortization of deferred debt financing costs and bond discount/premium		3,208		4,684
Deferred income taxes		(15,158)		15,097
Impairment of goodwill		70,580		—
Loss on sales of assets		258		177
Gain on extinguishment of debt		—		(786)
Share-based compensation expense		4,395		3,301
Changes in assets and liabilities, net of effects of businesses acquired:
Trade accounts receivable		468		7,381
Inventories		3,136		57,200
Prepaid expenses and other current assets		(787)		(2,332)
Income tax receivable/payable, net		(4,001)		(1,078)
Other assets		(2,646)		(1,042)
Trade accounts payable		4,472		6,639
Accrued expenses		(26,326)		(16,046)
Other liabilities		1,080		1,005
Net cash provided by operating activities		46,410		132,377

Cash flows from investing activities:
Capital expenditures		(13,747)		(10,605)
Proceeds from sales of assets		(422)		51,497
Net cash (used in) provided by investing activities		(14,169)		40,892

Cash flows from financing activities:
Repurchases of senior notes		(21,315)		(23,350)
Repayments of borrowings under term loan facility		(685)		(121,000)
Repayments of borrowings under revolving credit facility		(60,000)		(107,500)
Borrowings under revolving credit facility		80,000		105,000
Dividends paid		(29,958)		(27,337)
Payments of tax withholding on behalf of employees for net share settlement of share-based compensation		(615)		(1,879)
Net cash used in financing activities		(32,573)		(176,066)

Effect of exchange rate fluctuations on cash and cash equivalents		(439)		127
Net decrease in cash and cash equivalents		(771)		(2,670)

Cash and cash equivalents at beginning of period		41,094		45,442
Cash and cash equivalents at end of period	$	40,323	$	42,772

Supplemental disclosures of cash flow information:
Cash interest payments	$	71,254	$	71,916
Cash income tax payments	$	10,044	$	9,991
Non-cash investing and financing transactions:
Dividends declared and not yet paid	$	15,041	$	13,735
Accruals related to purchases of property, plant and equipment	$	1,798	$	1,525
Right-of-use assets obtained in exchange for new operating lease liabilities	$	2,709	$	6,750

See Notes to Consolidated Financial Statements.

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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 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, 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, 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, Grandma’s Molasses, Green Giant, Joan of Arc, Las Palmas, Le Sueur, MacDonald’s, Mama Mary’s, Maple Grove Farms, 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 13 and 52 weeks, respectively, ending on the Saturday closest to December 31 in the case of our fiscal year and fourth fiscal quarter, and on the Saturday closest to the end of the corresponding calendar quarter in the case of our fiscal quarters. As a result, a 53^rdweek is added to our fiscal year every five or six years. Generally, in a 53-week fiscal year our fourth fiscal quarter contains 14 weeks. Our fiscal year ending December 28, 2024 (fiscal 2024) and our fiscal year ended December 30, 2023 (fiscal 2023) each contains 52 weeks. Each quarter of fiscal 2024 and 2023 contains 13 weeks.

Basis of Presentation

The accompanying unaudited consolidated interim financial statements for the thirteen and twenty-six week periods ended June 29, 2024 (second quarter and first two quarters of 2024) and July 1, 2023 (second quarter and first two quarters of 2023) 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 June 29, 2024, and the results of our operations, comprehensive (loss) income, changes in stockholders’ equity and cash flows for the second quarter and first two quarters of 2024 and 2023. Our results of operations for the second quarter and first two quarters of 2024 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 2023 filed with the SEC on February 28, 2024 (which we refer to as our 2023 Annual Report on Form 10-K).

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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.

Segment Reporting

Effective in the first quarter of 2024, we realigned our reportable segments to correspond with changes to our organizational responsibilities, management structure and operating model. As a result of the change, we now manage and report the following four segments: Specialty, Meals, Frozen & Vegetables and Spices & Flavor Solutions. See Note 16, “Business Segment Information,” for information about our transition from one reporting segment to four reporting segments.

Accounting Standards Adopted in Fiscal 2024 or Fiscal 2023

In October 2021, the Financial Accounting Standards Board (FASB) issued a new Accounting Standards Update (ASU) that provides an exception to fair value measurement for revenue contracts acquired in business combinations. This guidance became effective during fiscal 2023 and will be applied to any future business combinations. 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 December 2023, the FASB issued a new ASU that requires improved disclosures related to the rate reconciliation and income taxes paid. This ASU requires companies to reconcile the income tax expense attributable to continuing operations to the statutory federal income tax rate applied to pre-tax income from continuing operations. This ASU is effective for annual periods beginning with fiscal 2025. Early adoption is permitted. The guidance is required to be applied on a prospective basis with the option to apply retrospectively to all prior periods presented in the financial statements. We are currently evaluating the expected impact to our consolidated financial statements and related disclosures.

In November 2023, the FASB issued a new ASU that enhances segment disclosures and requires additional disclosures of segment expenses. This ASU is effective for fiscal 2024 annual reporting, and for the first quarter of 2025 for interim period reporting. We will adopt the guidance when it becomes effective for our 2024 annual reporting. Retrospective adoption is required for all prior periods presented. As this ASU requires only additional disclosures, the adoption of this ASU will not impact our consolidated financial position, results of operations or liquidity.

(3)

Acquisitions and Divestitures

Divestiture of Green Giant U.S. Shelf-Stable Product Line

During the third quarter of 2023, we reclassified $201.8 million of assets related to our Green Giant U.S. shelf-stable product line as assets held for sale because we had decided to divest the product line, which was no longer core to our overall business and long-term strategy. We then measured the assets held for sale at the lower of their carrying value or fair value less anticipated costs to sell and recorded pre-tax, non-cash charges of $132.9 million during the third quarter of 2023. On November 8, 2023, we completed the sale of the Green Giant U.S. shelf-stable product line to Seneca Foods Corporation and we recorded a loss on sale of $4.8 million during the fourth quarter, resulting in a total loss on sale of $137.7 million during fiscal 2023. The sale did not include our Green Giant frozen business, Green Giant Canada business, or the Le Sueur brand. Because we retained the Green Giant trademarks, we agreed to license the Green Giant trademarks to Seneca on a perpetual, royalty-free basis for use in connection with the Green Giant U.S.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

shelf-stable product line. In connection with the sale, we provided certain transition services to Seneca from the closing date through February 6, 2024.

After certain post-closing adjustments, we recognized a pre-tax loss on the divestiture of $137.8 million, as calculated below (in thousands):



Cash received⁽¹⁾	$	55,166
Less:
Assets sold:
Trademarks — indefinite-lived intangible assets	$	115,340
Inventories		73,563
Customer relationships — finite-lived intangible assets		4,111
Total assets sold		193,014
Pre-tax loss on sale of assets⁽²⁾	$	(137,848)

(1)	Cash received of $55.2 million is net of a post-closing inventory adjustment of $0.4 million.

(2)	Pre-tax loss on sale of assets of $137.8 million consists of $132.9 million recorded during the third quarter of 2023, $4.8 million recorded during the fourth quarter of 2023, and $0.1 million recorded during the first quarter of 2024.

Back to Nature Divestiture

On December 15, 2022, we entered into an agreement to sell the Back to Nature business to a subsidiary of Barilla America, Inc. for a purchase price of $51.4 million in cash, subject to closing and post-closing adjustments based upon inventory at closing. We refer to this divestiture as the “Back to Nature sale.”

During fiscal 2022, we reclassified $157.7 million of assets related to our Back to Nature business as assets held for sale. We measured the assets held for sale at the lower of their carrying value or fair value less anticipated costs to sell and recorded pre-tax, non-cash impairment charges of $103.6 million during the third quarter of 2022. After we entered into the sale agreement, we recorded additional pre-tax, non-cash impairment charges of $2.8 million related to those assets during the fourth quarter of 2022. As a result, we had assets held for sale related to our Back to Nature business of $51.3 million at December 31, 2022.

Effective January 3, 2023, the first business day of fiscal 2023, we completed the Back to Nature sale. During the first quarter of 2023, we recognized a pre-tax loss on the Back to Nature sale of $0.1 million, as calculated below (in thousands):



Cash received	$	51,414
Less:
Assets sold:
Trademarks — indefinite-lived intangible assets	$	109,900
Goodwill		29,500
Customer relationships — finite-lived intangible assets		11,025
Inventories		7,323
Impairment of assets held for sale		(106,434)
Total assets sold		51,314
Expenses		185
Pre-tax loss on sale of assets	$	(85)

As a result of the Back to Nature divestiture, we incurred a capital loss for tax purposes, for which we recorded a deferred tax asset during the first quarter of 2023. A valuation allowance has been recorded against this deferred tax asset, which negatively impacted our income tax expense for the first quarter of 2023 by $14.7 million.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(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.

Inventories consist of the following, as of the dates indicated (in thousands):


	June 29, 2024		December 30, 2023
Raw materials and packaging	$	105,450	$	92,707
Work-in-process		85,034		128,073
Finished goods		369,110		348,200
Inventories	$	559,594	$	568,980