B&G Foods, Inc 10-Q for FY2020 Q2

B&G Foods, Inc. (BGS)

10-Q 2020-07-31 For: 2020-06-27

Added on April 08, 2026

About this 10-Q

B&G Foods, Inc filed this 10-Q on July 31, 2020, covering the quarter ended June 27, 2020 (FY2020 Q2).

Headline figures

Quarter ended June 27, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $512.54M; up 38.1% from $371.2M a year earlier
Net income: $44.91M; up 146.1% from net income of $18.25M a year earlier
Diluted EPS: $0.70; up 150.0% from $0.28 a year earlier

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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)


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


Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐

Emerging growth company ☐

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	29
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	44
	Item 4. Controls and Procedures	45

PART II OTHER INFORMATION		46

	Item 1. Legal Proceedings	46
	Item 1A. Risk Factors	46
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	47
	Item 3. Defaults Upon Senior Securities	47
	Item 4. Mine Safety Disclosures	47
	Item 5. Other Information	47
	Item 6. Exhibits	48

SIGNATURE		49


	June 27,		December 28,
	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	181,200	$	11,315
Trade accounts receivable, net		141,216		143,908
Inventories		356,803		472,187
Prepaid expenses and other current assets		34,434		25,449
Income tax receivable		4,196		8,934
Total current assets		717,849		661,793

Property, plant and equipment, net of accumulated depreciation of $288,282 and $270,454 as of June 27, 2020 and December 28, 2019, respectively		283,827		304,934
Operating lease right-of-use assets, net		35,925		38,698
Goodwill		598,860		596,391
Other intangible assets, net		1,606,164		1,615,126
Other assets		3,017		3,277
Deferred income taxes		6,180		7,371
Total assets	$	3,251,822	$	3,227,590

Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable	$	122,887	$	114,936
Accrued expenses		58,780		55,659
Current portion of operating lease liabilities		10,946		9,813
Current portion of long-term debt		4,500		5,625
Income tax payable		2,297		454
Dividends payable		30,476		30,421
Total current liabilities		229,886		216,908

Long-term debt		1,874,442		1,874,158
Deferred income taxes		268,962		254,339
Long-term operating lease liabilities, net of current portion		28,003		31,997
Other liabilities		33,380		37,646
Total liabilities		2,434,673		2,415,048
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; 64,160,453 and 64,044,649 shares issued and outstanding as of June 27, 2020 and December 28, 2019, respectively		642		640
Additional paid-in capital		—		—
Accumulated other comprehensive loss		(44,057)		(31,894)
Retained earnings		860,564		843,796
Total stockholders’ equity		817,149		812,542
Total liabilities and stockholders’ equity	$	3,251,822	$	3,227,590


☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


	Thirteen Weeks Ended				Twenty-six Weeks Ended
	June 27,		June 29,		June 27,		June 29,
	2020		2019		2020		2019
Net sales	$	512,539	$	371,197	$	961,909	$	783,931
Cost of goods sold		378,438		279,330		722,892		603,985
Gross profit		134,101		91,867		239,017		179,946

Operating expenses:
Selling, general and administrative expenses		44,347		39,856		84,320		78,153
Amortization expense		4,739		4,601		9,462		9,092
Operating income		85,015		47,410		145,235		92,701

Other income and expenses:
Interest expense, net		24,849		23,179		50,888		46,253
Other income		(701)		(525)		(1,154)		(783)
Income before income tax expense		60,867		24,756		95,501		47,231
Income tax expense		15,956		6,505		22,498		12,189
Net income	$	44,911	$	18,251	$	73,003	$	35,042

Weighted average shares outstanding:
Basic		64,130		65,341		64,088		65,464
Diluted		64,410		65,391		64,247		65,504

Earnings per share:
Basic	$	0.70	$	0.28	$	1.14	$	0.54
Diluted	$	0.70	$	0.28	$	1.14	$	0.53

Cash dividends declared per share	$	0.475	$	0.475	$	0.950	$	0.950


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Retained		Stockholders’
	Shares	Amount		Capital		Loss		Earnings		Equity
Balance at December 28, 2019	64,044,649	$	640	$	—	$	(31,894)	$	843,796	$	812,542
Foreign currency translation	—		—		—		(14,349)		—		(14,349)
Change in pension benefit (net of $104 of income taxes)	—		—		—		296		—		296
Net income	—		—		—		—		28,092		28,092
Share-based compensation	—		—		—		—		163		163
Net issuance of common stock for share-based compensation	75,848		1		—		—		(1)		—
Dividends declared on common stock, $0.475 per share	—		—		—		—		(30,457)		(30,457)
Balance at March 28, 2020	64,120,497	$	641	$	—	$	(45,947)	$	841,593	$	796,287
Foreign currency translation	—		—		—		1,671		—		1,671
Change in pension benefit (net of $77 of income taxes)	—		—		—		219		—		219
Net income	—		—		—		—		44,911		44,911
Share-based compensation	—		—		—		—		4,601		4,601
Net issuance of common stock for share-based compensation	39,956		1		—		—		(65)		(64)
Dividends declared on common stock, $0.475 per share	—		—		—		—		(30,476)		(30,476)
Balance at June 27, 2020	64,160,453	$	642	$	—	$	(44,057)	$	860,564	$	817,149


Purchase Price Allocation:	May 15, 2019
Cash and cash equivalents	$	2,202
Trade accounts receivable, net		5,627
Inventories		10,641
Prepaid expenses and other current assets		154
Income tax receivable		7
Property, plant and equipment, net		20,697
Operating lease right-of-use assets		7,841
Trademarks — indefinite-lived intangible assets		19,600
Customer relationships — finite-lived intangible assets		18,500
Trade accounts payable		(3,007)
Accrued expenses		(1,315)
Operating lease liabilities, current portion		(952)
Long-term operating lease liabilities, net of current portion		(7,319)
Goodwill		11,956
Total purchase price (paid in cash)	$	84,632


	June 27, 2020		December 28, 2019
Raw materials and packaging	$	80,873	$	65,673
Work-in-process		39,332		111,866
Finished goods		236,598		294,648
Inventories	$	356,803	$	472,187


	June 27, 2020						December 28, 2019
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Finite-Lived Intangible Assets
Trademarks	$	20,100	$	5,026	$	15,074	$	19,600	$	4,462	$	15,138
Customer relationships		354,090		138,300		215,790		354,090		129,402		224,688
Total finite-lived intangible assets	$	374,190	$	143,326	$	230,864	$	373,690	$	133,864	$	239,826

Indefinite-Lived Intangible Assets
Goodwill	$	598,860					$	596,391
Trademarks	$	1,375,300					$	1,375,300


	June 27, 2020		December 28, 2019
Revolving credit loans	$	—	$	—
Tranche B term loans due 2026		447,750		450,000
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		(19,333)		(20,869)
Unamortized discount/premium		525		652
Total long-term debt, net of unamortized deferred debt financing costs and discount/premium		1,878,942		1,879,783
Current portion of long-term debt		(4,500)		(5,625)
Long-term debt, net of unamortized deferred debt financing costs and discount/premium, and excluding current portion	$	1,874,442	$	1,874,158


	Aggregate Contractual Maturities
Fiscal year:
2020 remaining	$	3,375
2021		4,500
2022		4,500
2023		4,500
2024		4,500
Thereafter		1,876,375
Total	$	1,897,750


		June 27, 2020						December 28, 2019
	Carrying Value			Fair Value			Carrying Value			Fair Value
Revolving credit loans	$	—		$	—		$	—		$	—
Tranche B term loans due 2026		445,713	⁽¹⁾		439,027	⁽²⁾		447,820	⁽¹⁾		451,179	⁽²⁾
5.25% senior notes due 2025		902,562	⁽³⁾		909,331	⁽²⁾		902,832	⁽³⁾		929,917	⁽²⁾
5.25% senior notes due 2027	$	550,000		$	550,000	⁽²⁾	$	550,000		$	550,000	⁽²⁾


	Twenty-six Weeks Ended
	June 27,		June 29,
	2020		2019
Cash flows from operating activities:
Net income	$	73,003	$	35,042
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		30,919		28,420
Amortization of operating lease right-of-use assets		5,968		5,377
Amortization of deferred debt financing costs and bond discount/premium		1,799		1,745
Deferred income taxes		14,281		7,240
Net (gain)/loss on sales and disposals of property, plant, and equipment		(61)		13
Share-based compensation expense		4,244		1,964
Changes in assets and liabilities, net of effects of businesses acquired:
Trade accounts receivable		1,751		21,246
Inventories		110,038		10,251
Prepaid expenses and other current assets		(9,667)		(5,035)
Income tax receivable/payable		6,930		(39,759)
Other assets		(150)		122
Trade accounts payable		10,903		(32,335)
Accrued expenses		(25)		(16,749)
Other liabilities		(3,567)		(696)
Net cash provided by operating activities		246,366		16,846

Cash flows from investing activities:
Capital expenditures		(10,016)		(18,148)
Proceeds from sale of property, plant and equipment		303		—
Payments for acquisition of businesses, net of cash acquired		(3,227)		(82,430)
Net cash used in investing activities		(12,940)		(100,578)

Cash flows from financing activities:
Repayments of long-term debt		(2,250)		—
Repayments of borrowings under revolving credit facility		(160,000)		(95,000)
Borrowings under revolving credit facility		160,000		260,000
Dividends paid		(60,878)		(62,194)
Payments for repurchase of common stock, net		—		(10,000)
Payments of tax withholding on behalf of employees for net share settlement of share-based compensation		(64)		(905)
Net cash (used in) provided by financing activities		(63,192)		91,901

Effect of exchange rate fluctuations on cash and cash equivalents		(349)		94


	Amounts Reclassified from AOCL
	Thirteen Weeks Ended				Twenty-six Weeks Ended				Affected Line Item in
	June 27,		June 29,		June 27,		June 29,		the Statement Where
Details about AOCL Components	2020		2019		2020		2019		Net Income is Presented
Defined benefit pension plan items
Amortization of unrecognized loss	$	296	$	215	$	696	$	430	See (1) below
Accumulated other comprehensive loss before tax		296		215		696		430	Total before tax
Tax expense		(77)		(52)		(181)		(105)	Income tax expense
Total reclassification	$	219	$	163	$	515	$	325	Net of tax


			Foreign Currency
	Defined Benefit		Translation
	Pension Plan Items		Adjustments		Total
Balance at December 28, 2019	$	(24,761)	$	(7,133)	$	(31,894)
Other comprehensive income before reclassifications		—		(12,678)		(12,678)
Amounts reclassified from AOCL		515		—		515
Net current period other comprehensive income		515		(12,678)		(12,163)
Balance at June 27, 2020	$	(24,246)	$	(19,811)	$	(44,057)


	Maturities of Operating Lease Liabilities
Fiscal year:
2020 remaining	$	6,175
2021		11,613
2022		5,974
2023		5,750
2024		5,088
Thereafter		8,521
Total undiscounted future minimum lease payments		43,121
Less: Imputed interest		(4,172)
Total present value of future operating lease liabilities	$	38,949


		Weighted		Weighted Average
		Average		Contractual Life	Aggregate
	Options	Exercise Price		Remaining (Years)	Intrinsic Value
Outstanding at December 28, 2019	1,110,212	$	31.20	6.4	$	—
Granted	22,193	$	24.17
Exercised	—	$	—
Forfeited	(7,989)	$	27.32
Cancelled	—	$	—
Outstanding at June 27, 2020	1,124,416	$	31.09	6.0	$	—
Exercisable at June 27, 2020	925,835	$	32.04	5.6	$	—


	2020		2019
Weighted average grant date fair value	$	4.51	$	2.44
Expected volatility		45.4%		31.3%
Expected term		5.5 years		5.5 years
Risk-free interest rate		0.4%		1.9%
Dividend yield		7.9%		8.4%


		Weighted Average
	Number of	Grant Date Fair Value
	Performance Shares⁽¹⁾	(per share)⁽²⁾
Outstanding at December 28, 2019	661,305	$	22.37
Granted	463,434	$	10.84
Vested	—	$	—
Forfeited	(133,900)	$	32.85
Outstanding at June 27, 2020	990,839	$	15.56


		Weighted Average
	Number of Shares	Grant Date Fair Value
	of Restricted Stock	(per share)⁽¹⁾
Outstanding at December 28, 2019	32,059	$	24.33
Granted	76,440	$	16.50
Vested	(10,686)	$	24.33
Forfeited	—	$	—
Outstanding at June 27, 2020	97,813	$	18.21


			Guarantor		Non-Guarantor
	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	164,160	$	17,040	$	—	$	181,200
Trade accounts receivable, net		—		132,163		9,053		—		141,216
Inventories, net		—		309,688		47,115		—		356,803
Prepaid expenses and other current assets		—		27,071		7,363		—		34,434
Income tax receivable		—		3,523		673		—		4,196
Intercompany receivables		—		10,258		—		(10,258)		—
Total current assets		—		646,863		81,244		(10,258)		717,849

Property, plant and equipment, net		—		248,223		35,604		—		283,827
Operating lease right-of-use assets, net		—		35,880		45		—		35,925
Goodwill		—		598,860		—		—		598,860
Other intangible assets, net		—		1,606,164		—		—		1,606,164
Other assets		—		2,915		102		—		3,017
Deferred income taxes		—		—		6,180		—		6,180
Investments in subsidiaries		2,745,900		95,664		—		(2,841,564)		—
Total assets	$	2,745,900	$	3,234,569	$	123,175	$	(2,851,822)	$	3,251,822

Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable	$	—	$	111,572	$	11,315	$	—	$	122,887
Accrued expenses		—		55,191		3,589		—		58,780
Current portion of operating lease liabilities		—		10,902		44		—		10,946
Current portion of long-term debt		4,500		—		—		—		4,500
Income tax payable		—		—		2,297		—		2,297
Dividends payable		30,476		—		—		—		30,476
Intercompany payables		—		—		10,258		(10,258)		—
Total current liabilities		34,976		177,665		27,503		(10,258)		229,886

Long-term debt		1,893,775		(19,333)		—		—		1,874,442
Deferred income taxes		—		268,962		—		—		268,962
Long-term operating lease liabilities, net of current portion		—		27,995		8		—		28,003
Other liabilities		—		33,380		—		—		33,380
Total liabilities		1,928,751		488,669		27,511		(10,258)		2,434,673

Stockholders' equity:
Preferred stock		—		—		—		—		—
Common stock		642		—		—		—		642
Additional paid-in capital		—		1,836,233		68,254		(1,904,487)		—
Accumulated other comprehensive loss		(44,057)		(44,057)		(19,814)		63,871		(44,057)
Retained earnings		860,564		953,724		47,224		(1,000,948)		860,564
Total stockholders’ equity		817,149		2,745,900		95,664		(2,841,564)		817,149
Total liabilities and stockholders’ equity	$	2,745,900	$	3,234,569	$	123,175	$	(2,851,822)	$	3,251,822


	Base Business
	Net Sales Increase (Decrease)
	Dollars (in millions)		Percentage
Brand:
Green Giant - shelf-stable⁽¹⁾	$	33.6	133.2	%
Green Giant - frozen		17.6	20.1	%
Ortega		12.8	37.4	%
Spices & Seasonings⁽²⁾		7.5	12.3	%
Dash		6.4	44.4	%
Cream of Wheat		6.3	54.0	%
Clabber Girl⁽³⁾		3.0	35.9	%
Maple Grove Farms of Vermont		0.2	1.5	%
Back to Nature		(2.0)	(12.5)	%
All other brands		40.3	42.4	%
Base business net sales increase	$	125.7	33.9	%


EXHIBIT NO.		DESCRIPTION

31.1		Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 of the Chief Executive Officer.

31.2		Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 of the Chief Financial Officer.

32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Chief Executive Officer and Chief Financial Officer.

101		The following unaudited financial information from B&G Foods’ Quarterly Report on Form 10-Q for the quarter ended June 27, 2020, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows, (vi) Notes to Consolidated Financial Statements, and (vii) document and entity information.

104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 27, 2020, formatted in iXBRL and contained in Exhibit 101.


Dated: July 31, 2020	B&G FOODS, INC.


	By:	/s/ Bruce C. Wacha
		Bruce C. Wacha Executive Vice President of Finance and Chief Financial Officer (Principal Financial Officer and Authorized Officer)