Sales of Assets

3 Months Ended

Sep. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

Sales of Assets

Note 3. Discontinued Operations

On June 30, 2023, the Company completed the sale of certain assets of the Company related to its direct ship and private label business, including the Company’s production facility and corporate office building in Northlake, Texas, pursuant to that certain Asset Purchase Agreement dated as of June 6, 2023, by and between the Company and TreeHouse Foods, Inc. (the "Buyer"), as amended by that certain Amendment to the Asset Purchase Agreement, dated June 30, 2023.

The accounting requirements for reporting the Sale as a discontinued operation were met when the Sale was completed as of June 30, 2023. Accordingly, the consolidated financial statements reflect the results of the Sale as a discontinued operation.

The Company also entered into (i) a Transition Services Agreement with the Buyer pursuant to which the Company will provide the Buyer certain specified services on a temporary basis, (ii) a Co-Manufacturing Agreement with the Buyer pursuant to which the Company and Buyer will manufacture certain products for each other on a temporary basis and (iii) a Lease Agreement with the Buyer pursuant to which the Company will lease office and warehouse space from the Buyer on a temporary basis.

There was no activity related to the discontinued operations for the quarter ended September 30, 2023. The operating results of the divested operations have been reclassified as discontinued operations in the Consolidated Statements of Operations for the quarter ended September 30, 2022, as detailed in the table below:

(In thousands)	Three Months Ended September 30, 2022
Net sales	$	41,554
Cost of goods sold	41,975
Gross (loss) profit	(421)
Selling expenses	1,835
General and administrative expenses	1,259
Operating expense	3,094
Loss from discontinued operations	(3,515)
Other (expense) income:
Interest expense	(2,571)
Other, net	292
Total other (expense)	(2,279)
Loss from discontinued operations before taxes	(5,794)
Income tax benefit	—
Loss from discontinued operations, net of income taxes	$	(5,794)

Interest expense for the Revolver (as defined below) was allocated on a ratio of net assets discontinued to the sum of consolidated net assets plus consolidated debt and the Term Loan (as defined below) was fully allocated to discontinued operations as it was required to be repaid in full.

Applicable Consolidated Statements of Cash Flow information related to the divested operations for the quarter ended September 30, 2022 is detailed in the table below:

(In thousands)	September 30, 2022
Cash Flows from Discontinued Operations
Net cash used in operating activities	$	(7,165)
Net cash used in investing activities	(165)

Note 21. Sales of Assets

Sale of Branch Property

During the three months ended September 30, 2023, the Company completed the sale of four branch properties. The total sales price was $9.7 million and net proceeds was $8.9 million. The completed sale of branch properties resulted in a gain on sale of $7.5 million.