0001558370-22-012207.txt : 20220804 0001558370-22-012207.hdr.sgml : 20220804 20220804161836 ACCESSION NUMBER: 0001558370-22-012207 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 81 CONFORMED PERIOD OF REPORT: 20220702 FILED AS OF DATE: 20220804 DATE AS OF CHANGE: 20220804 FILER: COMPANY DATA: COMPANY CONFORMED NAME: B&G Foods, Inc. CENTRAL INDEX KEY: 0001278027 STANDARD INDUSTRIAL CLASSIFICATION: FOOD & KINDRED PRODUCTS [2000] IRS NUMBER: 133918742 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-32316 FILM NUMBER: 221136862 BUSINESS ADDRESS: STREET 1: FOUR GATEHALL DRIVE STREET 2: SUITE 110 CITY: PARSIPPANY STATE: NJ ZIP: 07054 BUSINESS PHONE: 9734016500 MAIL ADDRESS: STREET 1: FOUR GATEHALL DRIVE STREET 2: SUITE 110 CITY: PARSIPPANY STATE: NJ ZIP: 07054 FORMER COMPANY: FORMER CONFORMED NAME: B&G FOODS HOLDINGS CORP DATE OF NAME CHANGE: 20040129 10-Q 1 bgs-20220702x10q.htm QUARTERLY REPORT ON FORM 10-Q
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As filed with the Securities and Exchange Commission on August 4, 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 July 2, 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 July 29, 2022, the registrant had 71,670,346 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

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

23

Item 3. Quantitative and Qualitative Disclosures About Market Risk

38

Item 4. Controls and Procedures

39

PART II OTHER INFORMATION

40

Item 1. Legal Proceedings

40

Item 1A. Risk Factors

40

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

41

Item 3. Defaults Upon Senior Securities

41

Item 4. Mine Safety Disclosures

41

Item 5. Other Information

41

Item 6. Exhibits

41

SIGNATURE

42

- 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 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:
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)

July 2,

    

January 1,

2022

    

2022

Assets

Current assets:

Cash and cash equivalents

$

43,026

$

33,690

Trade accounts receivable, net

 

149,168

 

145,281

Inventories

 

667,668

 

609,794

Assets held for sale

3,256

Prepaid expenses and other current assets

 

42,261

 

38,151

Income tax receivable

 

14,637

 

4,284

Total current assets

 

916,760

 

834,456

Property, plant and equipment, net of accumulated depreciation of $361,343 and $364,182 as of July 2, 2022 and January 1, 2022, respectively

 

336,429

 

341,471

Operating lease right-of-use assets

73,230

65,166

Finance lease right-of-use assets

3,420

Goodwill

 

649,105

 

644,871

Other intangible assets, net

 

1,920,656

 

1,927,119

Other assets

 

7,171

 

6,916

Deferred income taxes

 

10,151

 

8,546

Total assets

$

3,916,922

$

3,828,545

Liabilities and Stockholders’ Equity

Current liabilities:

Trade accounts payable

$

164,118

$

129,861

Accrued expenses

 

65,631

 

66,901

Current portion of operating lease liabilities

15,222

12,420

Current portion of finance lease liabilities

1,034

Income tax payable

16

2,557

Dividends payable

 

34,043

 

32,548

Total current liabilities

 

280,064

 

244,287

Long-term debt

 

2,292,139

 

2,267,759

Deferred income taxes

 

312,778

 

310,641

Long-term operating lease liabilities, net of current portion

58,459

55,607

Long-term finance lease liabilities, net of current portion

2,320

Other liabilities

 

30,981

 

29,997

Total liabilities

 

2,976,741

 

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; 71,670,346 and 68,521,651 shares issued and outstanding as of July 2, 2022 and January 1, 2022, respectively

 

717

 

685

Additional paid-in capital

 

29,632

 

3,547

Accumulated other comprehensive loss

 

(19,170)

 

(18,169)

Retained earnings

 

929,002

 

934,191

Total stockholders’ equity

 

940,181

 

920,254

Total liabilities and stockholders’ equity

$

3,916,922

$

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

Twenty-six Weeks Ended

July 2,

    

July 3,

    

July 2,

    

July 3,

2022

    

2021

    

2022

    

2021

Net sales

$

478,965

$

464,375

$

1,011,372

$

969,509

Cost of goods sold

 

402,468

 

352,785

 

833,587

 

740,125

Gross profit

 

76,497

 

111,590

 

177,785

 

229,384

Operating (income) and expenses:

Selling, general and administrative expenses

 

44,197

 

47,076

 

91,037

 

97,455

Amortization expense

 

5,359

 

5,399

 

10,582

 

10,835

Gain on sales of assets

 

 

(7,099)

 

Operating income

 

26,941

 

59,115

 

83,265

 

121,094

Other income and expenses:

Interest expense, net

 

29,941

 

26,713

 

56,743

 

53,682

Other income

(1,848)

(1,117)

(3,687)

(2,208)

Income (loss) before income tax expense (benefit)

 

(1,152)

 

33,519

 

30,209

 

69,620

Income tax expense (benefit)

 

(1,408)

 

8,968

 

6,297

 

18,191

Net income

$

256

$

24,551

$

23,912

$

51,429

Weighted average shares outstanding:

Basic

69,904

64,777

69,267

64,680

Diluted

70,286

65,410

69,652

65,310

Earnings per share:

Basic

$

$

0.38

$

0.35

$

0.80

Diluted

$

$

0.38

$

0.34

$

0.79

Cash dividends declared per share

$

0.475

$

0.475

$

0.950

$

0.950

See Notes to Consolidated Financial Statements.

- 2 -

B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

Thirteen Weeks Ended

Twenty-six Weeks Ended

    

July 2,

    

July 3,

    

July 2,

    

July 3,

    

2022

    

2021

    

2022

    

2021

Net income

$

256

$

24,551

$

23,912

$

51,429

Other comprehensive income (loss):

Foreign currency translation adjustments

 

(3,721)

 

3,896

 

(1,042)

 

3,400

Amortization of unrecognized prior service cost and pension deferrals, net of tax

 

20

 

304

 

41

 

638

Other comprehensive income (loss)

 

(3,701)

 

4,200

 

(1,001)

 

4,038

Comprehensive income (loss)

$

(3,445)

$

28,751

$

22,911

$

55,467

See Notes to Consolidated Financial Statements.

- 3 -

B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

As of July 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

 

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

See Notes to Consolidated Financial Statements.

- 4 -

B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

As of July 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

 

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

See Notes to Consolidated Financial Statements.

- 5 -

B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Twenty-six Weeks Ended

    

July 2,

    

July 3,

    

2022

    

2021

Cash flows from operating activities:

Net income

$

23,912

$

51,429

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

 

40,299

 

40,529

Amortization of operating lease right-of-use assets

8,173

6,547

Amortization of deferred debt financing costs and bond discount/premium

 

2,346

 

2,289

Deferred income taxes

 

530

 

11,370

Gain on sales of assets

(7,113)

(30)

Share-based compensation expense

 

2,248

 

2,125

Changes in assets and liabilities, net of effects of businesses acquired:

Trade accounts receivable

 

(4,081)

 

11,372

Inventories

 

(56,632)

 

(38,653)

Prepaid expenses and other current assets

 

(1,977)

 

(5)

Income tax receivable/payable, net

 

(12,923)

 

5,721

Other assets

 

(887)

 

(115)

Trade accounts payable

 

35,481

 

(912)

Accrued expenses

 

(9,290)

 

(26,343)

Other liabilities

 

1,041

 

641

Net cash provided by operating activities

 

21,127

 

65,965

Cash flows from investing activities:

Capital expenditures

 

(13,200)

 

(19,813)

Proceeds from sales of assets

10,429

126

Payments for acquisition of businesses, net of cash acquired

 

(27,290)

 

Net cash used in investing activities

 

(30,061)

 

(19,687)

Cash flows from financing activities:

Repayments of borrowings under revolving credit facility

 

(162,500)

 

(85,000)

Borrowings under revolving credit facility

 

185,000

 

75,000

Proceeds from issuance of common stock, net

 

65,202

 

Dividends paid

 

(65,269)

 

(61,277)

Proceeds from exercise of stock options

60

14,782

Payments of tax withholding on behalf of employees for net share settlement of share-based compensation

 

(4,029)

 

(1,708)

Payments of debt financing costs

(276)

Net cash provided by (used in) financing activities

 

18,464

 

(58,479)

Effect of exchange rate fluctuations on cash and cash equivalents

 

(194)

 

341

Net increase (decrease) in cash and cash equivalents

 

9,336

 

(11,860)

Cash and cash equivalents at beginning of period

 

33,690

 

52,182

Cash and cash equivalents at end of period

$

43,026

$

40,322

Supplemental disclosures of cash flow information:

Cash interest payments

$

53,954

$

51,117

Cash income tax payments

$

18,989

$

1,065

Non-cash investing and financing transactions:

Dividends declared and not yet paid

$

34,043

$

30,792

Accruals related to purchases of property, plant and equipment

$

876

$

2,514

Right-of-use assets obtained in exchange for new operating lease liabilities

$

2,588

$

12,637

See Notes to Consolidated Financial Statements.

- 6 -

Table of Contents

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 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 53rd week 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 31, 2022 (fiscal 2022) and our fiscal year ended January 1, 2022 (fiscal 2021) each contains 52 weeks. Each quarter of fiscal 2022 and 2021 contains 13 weeks.

Basis of Presentation

The accompanying unaudited consolidated interim financial statements for the thirteen and twenty-six week periods ended July 2, 2022 (second quarter and first two quarters of 2022) and July 3, 2021 (second quarter and first two quarters 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 July 2, 2022, and the results of our operations, comprehensive income, changes in stockholders’ equity and cash flows for the second quarter and first two quarters of 2022 and 2021. Our results of operations for the second quarter and first two quarters 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).

- 7 -

Table of Contents

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

Yuma Acquisition

On May 5, 2022, we completed the acquisition of the frozen vegetable operations of Growers Express, LLC, whose primary business at the time of the acquisition was co-manufacturing certain Green Giant frozen vegetable products, including Green Giant® Riced Veggies and Green Giant Veggie Spirals®. The purchased assets include inventory, equipment, a sublease for a portion of a manufacturing facility in Yuma, Arizona, and a lease for a warehouse facility in San Luis, Arizona. Approximately 160 employees have transferred to B&G Foods. We refer to this acquisition as the “Yuma acquisition.” As part of the Yuma acquisition, we also repurchased the master license agreement for certain Green Giant Fresh vegetable products and have assumed responsibility for the administration of related sublicense agreements.

The following table sets forth the preliminary allocation of the Yuma acquisition purchase price to the estimated fair value of the net assets acquired at the date of acquisition. The preliminary purchase price allocation may be adjusted as a result of the finalization of our purchase price allocation procedures related to the assets acquired and liabilities assumed. We anticipate completing the purchase price allocation during fiscal 2023.

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Table of Contents

B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Preliminary Purchase Price Allocation (in thousands):

May 5, 2022

Inventories

$

3,342

Prepaid expenses and other current assets

187

Property, plant and equipment, net

12,508

Operating lease right-of-use assets

12,770

Finance lease right-of-use assets

3,529

Other intangible assets, net

4,483

Current portion of operating lease liabilities

(1,624)

Current portion of finance lease liabilities

(1,035)

Long-term operating lease liabilities, net of current portion

(8,756)

Long-term finance lease liabilities, net of current portion

(2,493)

Goodwill

4,379

Total purchase price (paid in cash)

$

27,290

(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):

    

July 2, 2022

    

January 1, 2022

Raw materials and packaging

$

141,119

$

94,799

Work-in-process

78,356

145,102

Finished goods

 

448,193

 

369,893

Inventories

$

667,668

$

609,794

(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):

July 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

$

6,800

$

4,156

$

2,644

$

6,800

$

3,929

$

2,871

Customer relationships

 

411,394

 

178,212

 

233,182

 

406,963

 

167,860

 

239,103

Total finite-lived intangible assets

$

418,194

$

182,368

$

235,826

$

413,763

$

171,789

$

241,974

Indefinite-Lived Intangible Assets

Goodwill

$

649,105

$

644,871

Trademarks

$

1,684,830

$

1,685,145

Amortization expense associated with finite-lived intangible assets was $5.4 million and $10.6 million for the second quarter and first two quarters of 2022, respectively, and $5.4 million and $10.8 million the second quarter and first two quarters of 2021, respectively, and is recorded in operating expenses. We expect to recognize an additional $10.8 million of amortization expense associated with our finite-lived intangible assets during the remainder of fiscal 2022, and thereafter $21.6 million of amortization expense in fiscal 2023, $21.5 million in each of fiscal 2024 and fiscal 2025, $20.8 million in fiscal 2026, and $16.0 million in fiscal 2027.

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Table of Contents

B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

We did not recognize any impairment charges for indefinite-lived intangible assets for the first two quarters of 2022 or 2021. During the fourth quarter of fiscal 2021, we partially impaired the Static Guard and Molly McButter brands, and these assets had a remaining carrying value of $36.5 million at July 2, 2022 and January 1, 2022. If, however, operating results for any of our brands, including recently impaired brands and newly acquired brands, deteriorate, at rates in excess of our current projections, we may be required to record non-cash impairment charges to certain intangible assets. In addition, any significant decline in our market capitalization, even if due to macroeconomic factors, could put pressure on the carrying value of our goodwill. A determination that all or a portion of our goodwill or indefinite-lived intangible assets are impaired, although a non-cash charge to operations, could have a material adverse effect on our business, goodwill and indefinite-lived intangible assets (trademarks), see Note 2(g), “Summary of Significant Accounting Policies—Goodwill and Other Intangible Assets” to our 2021 Annual Report on Form 10-K.

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Long-Term Debt

Long-term debt consists of the following, as of the dates indicated (in thousands):

    

July 2, 2022

    

January 1, 2022

Revolving credit loans

 

$

187,500

 

$

165,000

Tranche B term loans due 2026

671,625

671,625

5.25% senior notes due 2025

900,000

900,000

5.25% senior notes due 2027

550,000

550,000

Unamortized deferred debt financing costs

(15,012)

 

(16,805)

Unamortized discount/premium

 

(1,974)

 

(2,061)

Total long-term debt, net of unamortized deferred debt financing costs and discount/premium

2,292,139

2,267,759

As of July 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

 

1,087,500

2026

 

671,625

Thereafter

 

550,000

Total

$

2,309,125

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 provided for a $300.0 million add-on tranche B term loan facility, which closed and funded on December 16, 2020. The add-on tranche B term loans were issued at a price equal to 99.00% of their face value. The add-on term loans have the same terms as, and are fungible with, $371.6 million of tranche B term loans. We used the net proceeds of the add-on term loans to repay a portion of the revolving credit facility borrowings used to finance the Crisco acquisition. As of July 2, 2022, $671.6 million of tranche B term loans remained outstanding. The tranche B term loans mature on October 10, 2026.

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 1.00%, and LIBOR plus an applicable margin of 2.50%.