(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, 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, puffed corn and rice snacks, cookies and crackers, 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
,
Cream of Rice
,
Cream of Wheat
,
Devonsheer
,
Don Pepino
,
Durkee
,
Emeril’s
,
Grandma’s Molasses
,
Green Giant
,
JJ Flats
,
Joan of Arc
,
Las Palmas
,
Le Sueur
,
MacDonald’s
,
Mama Mary’s
,
Maple Grove Farms of Vermont
,
Molly McButter
,
Mrs. Dash
,
New York Flatbreads
,
New York Style
,
Old London
,
Original Tings
,
Ortega
,
Pirate’s Booty
,
Polaner
,
Red Devil
,
Regina
,
Sa-són
,
Sclafani
,
Smart Puffs
,
SnackWell’s, Spice Islands
,
Spring Tree
,
Sugar Twin
,
Tone’s
,
Trappey’s
,
TrueNorth
,
Underwood
,
Vermont Maid
,
Victoria
,
Weber
,
Wright’s
and, as of July 16, 2018,
McCann’s
, see Note 17, “Subsequent Event.” 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
rd
week is added to our fiscal year every five or six years. In a 53-week fiscal year our fourth fiscal quarter contains 14 weeks. Our fiscal year ending December 29, 2018 (fiscal 2018) and our fiscal year ended December 30, 2017 (fiscal 2017) each contain 52 weeks. Each quarter of fiscal 2018 and 2017 contains 13 weeks.
Basis of Presentation
The accompanying unaudited consolidated interim financial statements for the thirteen and twenty-six week periods ended June 30, 2018 (second quarter and first two quarters of 2018) and July 1, 2017 (second quarter and first two quarters of 2017) have been prepared by our company in accordance with generally accepted accounting principles (GAAP) in the United States of America 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 generally accepted accounting principles 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 30, 2018, and the results of our operations, comprehensive income and cash flows for the second quarter and first two quarters of 2018 and 2017. Our results of operations for the second quarter and first two quarters of 2018 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 2017 filed with the SEC on March 1, 2018. Certain prior year amounts have been reclassified to conform to the current year presentation.
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operation
s
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under the heading “Forward-Looking Statements” below and elsewhere in this report. The following discussion should be read in conjunction with the unaudited consolidated interim financial statements and related notes for the thirteen and twenty-six weeks ended June 30, 2018 (second quarter and first two quarters of 2018) included elsewhere in this report and the audited consolidated financial statements and related notes for the fiscal year ended December 30, 2017 (fiscal 2017) included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 1, 2018 (which we refer to as our 2017 Annual Report on Form 10-K).
General
We manufacture, sell and distribute a diverse portfolio of branded, high quality, shelf-stable and frozen foods and household products, many of which have leading regional or national market shares. In general, we position our branded products to appeal to the consumer desiring a high quality and reasonably priced product. We complement our branded product retail sales with institutional and foodservice sales and private label sales.
Our company has been built upon a successful track record of acquisition-driven growth. Our goal is to continue to increase sales, profitability and cash flows through strategic acquisitions, new product development and organic growth. We intend to implement our growth strategy through the following initiatives: expanding our brand portfolio with disciplined acquisitions of complementary branded businesses, continuing to develop new products and delivering them to market quickly, leveraging our multiple channel sales and distribution system and continuing to focus on higher growth customers and distribution channels.
Since 1996, we have successfully acquired and integrated more than 45 brands into our company. Most recently, on July 16, 2018, we acquired the
McCann’s
brand of premium Irish oatmeal from TreeHouse Foods, Inc. On October 2, 2017, we completed the acquisition of
Back to Nature Foods Company, LLC and related entities from Brynwood Partners VI L.P., Mondelēz International and certain other sellers
. We refer to these acquisitions in this report as the “
McCann’s
acquisition” and the “
Back to Nature
acquisition,” respectively. These acquisitions have been accounted for using the acquisition method of accounting and, accordingly, the assets acquired, liabilities assumed and results of operations of the acquired businesses are included in our consolidated financial statements from the date of acquisition. This acquisition and the application of the acquisition method of accounting affect comparability between periods.
We are subject to a number of challenges that may adversely affect our businesses. These challenges, which are discussed below and under the heading “Forward‑Looking Statements,” include:
Fluctuations in Commodity Prices and Production and Distribution Costs.
We purchase raw materials, including agricultural products, meat, poultry, ingredients and packaging materials from growers, commodity processors, other food companies and packaging suppliers located in U.S. and foreign locations. Raw materials and other input costs, such as fuel and transportation, are subject to fluctuations in price attributable to a number of factors. Fluctuations in commodity prices can lead to retail price volatility and intensive price competition, and can influence consumer and trade buying patterns. The cost of raw materials, fuel, labor, distribution and other costs related to our operations can increase from time to time significantly and unexpectedly. For example, during the first two quarters of 2018, we experienced industry-wide and anticipated significant increases in freight expenses and we expect freight expenses to continue to increase through at least the remainder of 2018, although we expect the rate of increase to moderate in the second half of the year.
We have also seen and expect to continue to see moderate net cost increases for raw materials in the marketplace during 2018 and are currently locked into our supply and prices for a majority of our most significant commodities (excluding, among others, maple syrup) through the remainder of fiscal 2018 at a cost increase of less than 1% of cost of goods sold. During fiscal 2017, we had a minimal cost increase for a majority of our most significant commodities (excluding, among others, maple syrup). To the extent we are unable to avoid or offset any present or future cost increases by locking in our costs, implementing cost saving measures or increasing prices to our customers,
our operating results could be materially adversely affected. In addition, if input costs begin to decline, customers may look for price reductions in situations where we have locked into purchases at higher costs.
We attempt to manage cost inflation risks by locking in prices through short‑term supply contracts and advance commodities purchase agreements and by implementing cost saving measures. We also attempt to offset rising input costs by raising sales prices to our customers. For example, in response to inflationary pressure, we announced during the first quarter of 2018 list price increases for the majority of our products. We saw some benefit from those list price increases during the second quarter of 2018, but we expect most of the benefit from the list price increases to occur in the second half of the year. However, increases in the prices we charge our customers often lag behind rising input costs and competitive pressures may limit our ability to quickly raise prices, or to raise prices at all, in response to rising costs. Moreover, customer and consumer acceptance of price increases cannot be assured.
Consolidation in the Retail Trade and Consequent Inventory Reductions.
As the retail grocery trade continues to consolidate and our retail customers grow larger and become more sophisticated, our retail customers may demand lower pricing and increased promotional programs. These customers are also reducing their inventories and increasing their emphasis on private label products.
Changing Consumer Preferences.
Consumers in the market categories in which we compete frequently change their taste preferences, dietary habits and product packaging preferences.
Consumer Concern Regarding Food Safety, Quality and Health.
The food industry is subject to consumer concerns regarding the safety and quality of certain food products. If consumers in our principal markets lose confidence in the safety and quality of our food products, even as a result of a product liability claim or a product recall by a food industry competitor, our business could be adversely affected.
Fluctuations in Currency Exchange Rates.
Our foreign sales are primarily to customers in Canada. Our sales to Canada are generally denominated in Canadian dollars and our sales for export to other countries are generally denominated in U.S. dollars. During the first two quarters of 2018 and 2017, our net sales to customers in foreign countries represented approximately 6.9% and 7.1%, respectively, of our total net sales. We also purchase a significant majority of our maple syrup requirements from suppliers located in Québec, Canada. Any weakening of the U.S. dollar against the Canadian dollar could significantly increase our costs relating to the production of our maple syrup products to the extent we have not purchased Canadian dollars in advance of any such weakening of the U.S. dollar or otherwise entered into a currency hedging arrangement in advance of any such weakening of the U.S. dollar. These increased costs would not be fully offset by the positive impact the change in the relative strength of the Canadian dollar versus the U.S. dollar would have on our net sales in Canada. Our purchases of raw materials from other foreign suppliers are generally denominated in U.S. dollars. We also operate a manufacturing facility in Irapuato, Mexico for the manufacture of
Green Giant
frozen products and are as a result exposed to fluctuations in the Mexican peso. Our results of operations could be adversely impacted by changes in foreign currency exchange rates. Costs and expenses in Mexico are recognized in local foreign currency, and therefore we are exposed to potential gains or losses from the translation of those amounts into U.S. dollars for consolidation into our financial statements.
To confront these challenges, we continue to take steps to build the value of our brands, to improve our existing portfolio of products with new product and marketing initiatives, to reduce costs through improved productivity, to address consumer concerns about food safety, quality and health and to favorably manage currency fluctuations.
Critical Accounting Policies; Use of Estimates
The preparation of financial statements in accordance with generally accepted accounting principles (GAAP) in the United States 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 trade and consumer promotion expenses; allowances for excess, obsolete and unsaleable inventories; pension benefits; acquisition accounting fair value allocations; the recoverability of goodwill, other intangible assets, property, plant and equipment, and deferred tax assets; the determination of the useful life of customer relationship and amortizable trademark intangibles; and the accounting for share-based compensation expense. Actual results could differ significantly from these estimates and assumptions.
In our 2017 Annual Report on Form 10-K, we identified the critical accounting policies which affect our more significant estimates and assumptions used in preparing our consolidated financial statements. There have been no material changes to these policies from those disclosed in our 2017 Annual Report on Form 10-K.
U.S. Tax Act
On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act, which we refer to as the “U.S. Tax Act.” The changes in the U.S. Tax Act are broad and complex and we continue to examine the impact the U.S. Tax Act may have on our business and financial results. The U.S. Tax Act contains provisions with separate effective dates but is generally effective for taxable years beginning after December 31, 2017.
Under FASB Accounting Standards Codification (ASC) Topic 740, Income Taxes, we were required to revalue any deferred tax assets or liabilities in the period of enactment of change in tax rates. The U.S. Tax Act lowered the corporate income tax rate from 35% to 21%.
The reduction in the corporate income tax rate from 35% to 21% is effective for our fiscal 2018. We estimate that our consolidated effective tax rate for fiscal 2018 will be approximately 25%.
We also expect to realize a cash tax benefit for future bonus depreciation on certain business additions, which, together with the reduced income tax rate, we expect to reduce our cash income tax payments.
The U.S. Tax Act also limits the deduction for net interest expense incurred by a corporate taxpayer to 30% of the taxpayer’s adjusted taxable income. We currently expect this limitation to have a temporary impact on our cash taxes, as the portion of our interest expense that exceeds the 30% limitation and is not deductible may be carried forward indefinitely.
The Securities and Exchange Commission (SEC) issued guidance on December 23, 2017 providing a one-year measurement period from a registrant’s reporting period that includes the U.S. Tax Act’s enactment date to allow the registrant sufficient time to obtain, prepare and analyze information to complete the accounting required under ASC 740. As of December 30, 2017, we recorded all known and estimable impacts of the U.S. Tax Act that were effective for fiscal 2017. Future adjustments to the provisional numbers will be recorded as discrete adjustments to income tax expense in the period in which those adjustments become estimable and/or are finalized.
The ultimate impact of the U.S. Tax Act on our reported results in fiscal 2018 and beyond may differ from the estimates provided in this report, possibly materially, due to, among other things, changes in interpretations and assumptions we have made, guidance that may be issued, and other actions we may take as a result of the U.S. Tax Act different from that currently contemplated.
Results of Operations
The following table sets forth the percentages of net sales represented by selected items for the second quarter and first two quarters of 2018 and 2017 reflected in our consolidated statements of operations. The comparisons of financial results are not necessarily indicative of future results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
Twenty-six Weeks Ended
|
|
|
June 30,
|
|
July 1,
|
|
June 30,
|
|
July 1,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
|
79.1
|
%
|
|
71.1
|
%
|
|
77.5
|
%
|
|
70.8
|
%
|
Gross profit
|
|
20.9
|
%
|
|
28.9
|
%
|
|
22.5
|
%
|
|
29.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
9.6
|
%
|
|
12.0
|
%
|
|
9.7
|
%
|
|
12.0
|
%
|
Amortization expense
|
|
1.2
|
%
|
|
1.2
|
%
|
|
1.2
|
%
|
|
1.1
|
%
|
Operating income
|
|
10.1
|
%
|
|
15.7
|
%
|
|
11.6
|
%
|
|
16.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
7.1
|
%
|
|
6.1
|
%
|
|
6.8
|
%
|
|
5.4
|
%
|
Loss on extinguishment of debt
|
|
0.1
|
%
|
|
0.3
|
%
|
|
0.4
|
%
|
|
0.2
|
%
|
Other expense (income)
|
|
0.1
|
%
|
|
(0.4)
|
%
|
|
(0.2)
|
%
|
|
(0.6)
|
%
|
Income before income tax expense
|
|
2.8
|
%
|
|
9.7
|
%
|
|
4.6
|
%
|
|
11.1
|
%
|
Income tax expense
|
|
0.7
|
%
|
|
3.6
|
%
|
|
1.1
|
%
|
|
4.0
|
%
|
Net income
|
|
2.1
|
%
|
|
6.1
|
%
|
|
3.5
|
%
|
|
7.1
|
%
|
As used in this section, the terms listed below have the following meanings:
Net Sales.
Our net sales represents gross sales of products shipped to customers plus amounts charged to customers for shipping and handling, less cash discounts, coupon redemptions, slotting fees and trade promotional spending, including marketing development funds.
Gross Profit.
Our gross profit is equal to our net sales less cost of goods sold. The primary components of our cost of goods sold are cost of internally manufactured products, purchases of finished goods from co‑packers, a portion of our warehousing expenses plus freight costs to our distribution centers and to our customers.
Selling, General and Administrative Expenses.
Our selling, general and administrative expenses include costs related to selling our products, as well as all other general and administrative expenses. Some of these costs include administrative, marketing and internal sales force employee compensation and benefits costs, consumer advertising programs, brokerage costs, a portion of our warehousing expenses, information technology and communication costs, office rent, utilities, supplies, professional services, acquisition‑related expenses and other general corporate expenses.
Amortization Expense.
Amortization expense includes the amortization expense associated with customer relationships, amortizable trademarks and other intangibles.
Net Interest Expense.
Net interest expense includes interest relating to our outstanding indebtedness, amortization of bond discount and amortization of deferred debt financing costs (net of interest income).
Loss on Extinguishment of Debt.
Loss on extinguishment of debt includes costs relating to the retirement of indebtedness, including repurchase premium, if any, and write‑off of deferred debt financing costs and unamortized discount, if any.
Other Expense (Income).
Other expense (income) includes income resulting from the remeasurement of monetary assets denominated in a foreign currency into U.S. dollars for financial reporting purposes and the impact of the newly adopted presentation of net periodic pension cost and net periodic postretirement benefit cost below operating profit, in accordance with the FASB ASU issued in March 2017. See Note 2, “Summary of Significant Accounting Policies —
Newly Adopted Accounting Standards
,” for further details.
Non-GAAP Financial Measures
Certain disclosures in this report include non-GAAP financial measures. A non-GAAP financial measure is defined as a numerical measure of our financial performance that excludes or includes amounts so as to be different from the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (GAAP) in the United States in our consolidated balance sheets and related consolidated statements of operations, comprehensive income and cash flows.
Base Business Net Sales.
Base business net sales is a non-GAAP financial measure used by management to measure operating performance. We define base business net sales as our net sales excluding (1) the impact of acquisitions until at least one full quarter of net sales from acquisitions are included in both comparable periods, (2) net sales of discontinued brands, and (3) net sales of our IQF bulk rice business, see footnote 2 to the table below. The portion of current period net sales attributable to recent acquisitions for which there is not at least one full quarter of net sales in the comparable period of the prior year is excluded. For each acquisition, the excluded period starts at the beginning of the most recent fiscal period being compared and ends on the last day of the quarter in which the first anniversary of the date of acquisition occurs, and the period from the date of acquisition to the end of the quarter in which the acquisition occurred. For discontinued brands, the entire amount of net sales is excluded from each fiscal period being compared. Management has included this financial measure because it provides useful and comparable trend information regarding the results of our business without the effect of the timing of acquisitions and the effect of discontinued brands.
The definition of base business net sales set forth above, as it relates to acquisitions, was modified in the fourth quarter of 2017. Under our previous definition of base business net sales, for each acquisition, the excluded period started at the beginning of the most recent fiscal period being compared and ended on the first anniversary of the acquisition date. We believe that it is more useful to measure base business net sales on a full quarter basis. The definition of base business net sales set forth above was modified in the first quarter of 2018 to exclude net sales of our IQF bulk rice business as described in footnote 2 below.
A reconciliation of base business net sales to reported net sales for the second quarter and first two quarters of 2018 and 2017 follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
Twenty-six Weeks Ended
|
|
|
June 30,
|
|
July 1,
|
|
June 30,
|
|
July 1,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net sales
|
|
$
|
388,378
|
|
$
|
361,676
|
|
$
|
820,107
|
|
$
|
773,983
|
Net sales from acquisitions
(1)
|
|
|
(17,622)
|
|
|
—
|
|
|
(37,662)
|
|
|
—
|
Net sales of non-branded IQF bulk rice products
(2)
|
|
|
(559)
|
|
|
(2,498)
|
|
|
(1,137)
|
|
|
(4,825)
|
Base business net sales
|
|
$
|
370,197
|
|
$
|
359,178
|
|
$
|
781,308
|
|
$
|
769,158
|
|
(1)
|
|
Reflects net sales for
Back to Nature
for the second quarter and first two quarters of 2018.
Back to Nature
was acquired on October 2, 2017.
|
|
(2)
|
|
Reflects net sales of our non-branded individually quick frozen (IQF) bulk rice products, which is a product line we acquired as part of the
Green Giant
acquisition, and which we are excluding from reported net sales for the purposes of calculating base business net sales because we do not consider the non-branded IQF bulk rice products to be part of our core business or material.
|
EBITDA and Adjusted EBITDA.
EBITDA and adjusted EBITDA are non‑GAAP financial measures used by management to measure operating performance. We define EBITDA as net income before net interest expense, income taxes, depreciation and amortization and loss on extinguishment of debt. We define adjusted EBITDA as EBITDA adjusted for cash and non-cash acquisition-related expenses, gains and losses (which may include third party fees and expenses, integration, restructuring and consolidation expenses, amortization of acquired inventory fair value step-up, and gains and losses on the sale of assets), non-recurring expenses and the non-cash accounting impact of our inventory reduction plan. Management believes that it is useful to eliminate net interest expense, income taxes, depreciation and amortization, loss on extinguishment of debt, acquisition-related and non-recurring expenses, gains and losses and the non-cash accounting impact of our inventory reduction plan because it allows management to focus on what it deems to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations. We use EBITDA and adjusted EBITDA in our business operations to, among other things, evaluate our operating performance, develop budgets and measure our performance against those budgets, determine employee bonuses and evaluate our cash flows in terms of cash needs. We also present EBITDA and adjusted EBITDA because we believe they are useful indicators of our historical debt capacity and ability to service debt and because covenants in our credit agreement and our senior notes indentures contain ratios based on these measures. As a result, internal management reports used during monthly operating reviews feature the EBITDA and adjusted EBITDA metrics. However, management uses these metrics in conjunction with traditional GAAP operating performance and liquidity measures as part of its overall assessment of company performance and liquidity, and therefore does not place undue reliance on these measures as its only measures of operating performance and liquidity.
EBITDA and adjusted EBITDA are not recognized terms under GAAP and do not purport to be alternatives to operating income, net income (loss) or any other GAAP measure as an indicator of operating performance. EBITDA and adjusted EBITDA are not complete net cash flow measures because EBITDA and adjusted EBITDA are measures of liquidity that do not include reductions for cash payments for an entity’s obligation to service its debt, fund its working capital, capital expenditures and acquisitions and pay its income taxes and dividends. Rather, EBITDA and adjusted EBITDA are two potential indicators of an entity’s ability to fund these cash requirements. EBITDA and adjusted EBITDA are not complete measures of an entity’s profitability because they do not include costs and expenses for depreciation and amortization, interest and related expenses, loss on extinguishment of debt, acquisition-related and non-recurring expenses, gains and losses, the non-cash accounting impact of our inventory reduction plan and income taxes. Because not all companies use identical calculations, this presentation of EBITDA and adjusted EBITDA may not be comparable to other similarly titled measures of other companies. However, EBITDA and adjusted EBITDA can still be useful in evaluating our performance against our peer companies because management believes these measures provide users with valuable insight into key components of GAAP amounts.
A reconciliation of EBITDA and adjusted EBITDA to net income and to net cash provided by operating activities for the second quarter and first two quarters of 2018 and 2017 along with the components of EBITDA and adjusted EBITDA follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
Twenty-six Weeks Ended
|
|
|
June 30,
|
|
July 1,
|
|
June 30,
|
|
July 1,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net income
|
|
$
|
7,976
|
|
$
|
22,061
|
|
$
|
28,523
|
|
$
|
54,825
|
Income tax expense
|
|
|
2,775
|
|
|
12,871
|
|
|
9,377
|
|
|
31,166
|
Interest expense, net
|
|
|
27,607
|
|
|
21,998
|
|
|
55,913
|
|
|
41,645
|
Depreciation and amortization
|
|
|
13,343
|
|
|
12,329
|
|
|
26,407
|
|
|
24,547
|
Loss on extinguishment of debt
(1)
|
|
|
546
|
|
|
1,045
|
|
|
3,324
|
|
|
1,163
|
EBITDA
|
|
|
52,247
|
|
|
70,304
|
|
|
123,544
|
|
|
153,346
|
Acquisition-related and non-recurring expenses
|
|
|
1,623
|
|
|
7,851
|
|
|
4,892
|
|
|
13,693
|
Inventory reduction plan impact
(2)
|
|
|
20,576
|
|
|
—
|
|
|
35,426
|
|
|
—
|
Amortization of acquisition-related inventory step-up
(3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,550
|
Loss on sale of assets
(4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,608
|
Adjusted EBITDA
|
|
|
74,446
|
|
|
78,155
|
|
|
163,862
|
|
|
170,197
|
Income tax expense
|
|
|
(2,775)
|
|
|
(12,871)
|
|
|
(9,377)
|
|
|
(31,166)
|
Interest expense, net
|
|
|
(27,607)
|
|
|
(21,998)
|
|
|
(55,913)
|
|
|
(41,645)
|
Acquisition-related and non-recurring expenses
|
|
|
(1,623)
|
|
|
(7,851)
|
|
|
(4,892)
|
|
|
(13,693)
|
Inventory reduction plan impact
(2)
|
|
|
(20,576)
|
|
|
—
|
|
|
(35,426)
|
|
|
—
|
Write-off of property, plant and equipment
|
|
|
8
|
|
|
105
|
|
|
29
|
|
|
105
|
Deferred income taxes
|
|
|
2,690
|
|
|
9,712
|
|
|
7,511
|
|
|
19,992
|
Amortization of deferred financing costs and bond discount
|
|
|
1,431
|
|
|
1,464
|
|
|
2,976
|
|
|
2,795
|
Amortization of acquisition-related inventory step-up
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,550)
|
Share-based compensation expense
|
|
|
1,759
|
|
|
2,059
|
|
|
2,597
|
|
|
3,202
|
Changes in assets and liabilities, net of effects of business combinations
|
|
|
3,307
|
|
|
(31,444)
|
|
|
33,437
|
|
|
(88,413)
|
Net cash provided by operating activities
|
|
$
|
31,060
|
|
$
|
17,331
|
|
$
|
104,804
|
|
$
|
19,824
|
|
(1)
|
|
For the second quarter of 2018 includes the write-off of deferred debt financing costs and unamortized discount of $0.4 million and $0.1 million, respectively, relating to the prepayment of outstanding borrowings under the tranche B term loans. For the first two quarters of 2018 includes the write-off of deferred debt financing costs and unamortized discount of $2.8 million and $0.5 million, respectively, relating to the prepayment of outstanding borrowings under the tranche B term loans. For the second quarter and first two quarters of 2017 includes the write-off of deferred debt financing costs and unamortized discount of $0.9 million and $0.2 million, respectively, relating to the repayment of all outstanding borrowings under the tranche A term loans and less than $0.1 million relating to the refinancing of our tranche B term loans.
|
|
(2)
|
|
Relates to the allocation of certain fixed manufacturing, warehouse and other corporate overhead costs associated with inventory purchased and converted into finished goods in fiscal 2017 and sold in the second quarter and first two quarters of 2018 as part of our inventory reduction plan.
|
|
(3)
|
|
Relates to the purchase accounting adjustments made to the finished goods inventory acquired in the spices & seasonings acquisition that we completed on November 21, 2016.
|
|
(4)
|
|
During the first two quarters of 2017, we sold to a third-party co-packer our Le Sueur, Minnesota research center, including the seed technology assets, property, plant and equipment. We acquired the research center and related assets on November 2, 2015, as part of the
Green Giant
acquisition. The sale resulted in a $1.6 million loss on sale of assets.
|
Adjusted Net Income
and
Adjusted Diluted Earnings Per Share.
Adjusted net income and adjusted diluted earnings per share are non-GAAP financial measures used by management to measure operating performance. We define adjusted net income and adjusted diluted earnings per share as net income and diluted earnings per share adjusted for certain items that affect comparability. These non-GAAP financial measures reflect adjustments to net income and diluted earnings per share to eliminate the items identified in the reconciliation below. This information is provided in order to allow investors to make meaningful comparisons of our operating performance between periods and to view our business from the same perspective as our management. Because we cannot predict the timing and amount of these items, management does not consider these items when evaluating our company’s performance or when making decisions regarding allocation of resources.
A reconciliation of adjusted net income and adjusted diluted earnings per share to net income for the second quarter and first two quarters of 2018 and 2017 along with the components of adjusted net income and adjusted diluted earnings per share follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
Twenty-six Weeks Ended
|
|
|
June 30,
|
|
July 1,
|
|
June 30,
|
|
July 1,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net income
|
|
$
|
7,976
|
|
$
|
22,061
|
|
$
|
28,523
|
|
$
|
54,825
|
Loss on extinguishment of debt, net of tax
(1)
|
|
|
412
|
|
|
654
|
|
|
2,514
|
|
|
727
|
Acquisition-related and non-recurring expenses, net of tax
|
|
|
1,223
|
|
|
4,911
|
|
|
3,697
|
|
|
8,565
|
Inventory reduction plan impact, net of tax
(2)
|
|
|
15,508
|
|
|
—
|
|
|
26,746
|
|
|
—
|
Acquisition-related inventory step-up, net of tax
(3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
970
|
Loss on sale of assets, net of tax
(4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,006
|
Adjusted net income
|
|
$
|
25,119
|
|
$
|
27,626
|
|
$
|
61,480
|
|
$
|
66,093
|
Adjusted diluted earnings per share
|
|
$
|
0.38
|
|
$
|
0.41
|
|
$
|
0.92
|
|
$
|
0.99
|
|
(1)
|
|
Includes the write-off of deferred debt financing costs and unamortized discount of $0.4 million and $0.1 million, respectively, relating to the prepayment of outstanding borrowings under the tranche B term loans. For the first two quarters of 2018 includes the write-off of deferred debt financing costs and unamortized discount of $2.8 million and $0.5 million, respectively, relating to the prepayment of outstanding borrowings under the tranche B term loans. For the second quarter and first two quarters of 2017 includes the write-off of deferred debt financing costs and unamortized discount of $0.9 million and $0.2 million, respectively, relating to the repayment of all outstanding borrowings under the tranche A term loans and less than $0.1 million relating to the refinancing of our tranche B term loans.
|
|
(2)
|
|
Relates to the allocation of certain fixed manufacturing, warehouse and other corporate overhead costs associated with inventory purchased and converted into finished goods in fiscal 2017 and sold in the second quarter and first two quarters of 2018 as part of our inventory reduction plan.
|
|
(3)
|
|
Relates to the purchase accounting adjustments made to the finished goods inventory acquired in the spices & seasonings acquisition that we completed on November 21, 2016.
|
|
(4)
|
|
During the first two quarters of 2017, we sold to a third-party co-packer our Le Sueur, Minnesota research center, including the seed technology assets, property, plant and equipment. We acquired the research center and related assets on November 2, 2015, as part of the
Green Giant
acquisition. The sale resulted in a $1.6 million loss on sale of assets.
|
Second quarter of 2018 compared to the second quarter of 2017
Net Sales.
Net sales increased $26.7 million, or 7.4%, to $388.4 million for the second quarter of 2018 from $361.7 million for the second quarter of 2017. Net sales of
Back to Nature
, acquired on October 2, 2017, contributed $17.6 million to our overall net sales for the second quarter of 2018.
Base business net sales for the second quarter of 2018 increased $11.0 million, or 3.1%, to $370.2 million from $359.2 million for the second quarter of 2017. The $11.0 million increase was attributable to an increase in net pricing of $4.3 million, or 1.2%, and unit volume of $6.7 million.
Net sales of
Green Giant
frozen increased $13.9 million, or 19.7%, compared to the second quarter of 2017. This growth was driven by
Green Giant
frozen innovation products. Net sales of Pirate Brands increased by 54.6%, largely due to the timing of promotional activities and increased distribution. This performance was offset, in part, by
Green Giant
shelf stable, whose net sales decreased 36.5%.
See Note 15, “Net Sales by Brand,” to our unaudited consolidated interim financial statements in Part I, Item 1 of this report, for detailed information regarding total net sales for each of our brands whose net sales for the first two quarters of 2018 or fiscal 2017 represent 3% or more of our total net sales for those periods and for “all other brands” in the aggregate. The following chart sets forth the base business net sales increases and decreases by brand for those brands for the second quarter of 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Business
|
|
|
|
Net Sales Increase (Decrease)
|
|
|
|
Dollars
(in millions)
|
|
Percentage
|
|
Brand:
|
|
|
|
|
|
|
Green Giant
- frozen
|
|
$
|
13.9
|
|
19.7
|
%
|
Pirate Brands
|
|
|
8.9
|
|
54.6
|
%
|
Maple Grove Farms of Vermont
|
|
|
0.8
|
|
4.8
|
%
|
|
|
|
|
|
|
|
Green Giant
- shelf stable
|
|
|
(7.7)
|
|
(36.5)
|
%
|
Spices & Seasonings
(1)
|
|
|
(3.5)
|
|
(5.3)
|
%
|
Bear Creek Country Kitchens
|
|
|
(1.1)
|
|
(25.0)
|
%
|
Ortega
|
|
|
(0.6)
|
|
(1.7)
|
%
|
Cream of Wheat
|
|
|
(0.4)
|
|
(3.5)
|
%
|
Mrs. Dash
|
|
|
(0.1)
|
|
(0.8)
|
%
|
|
|
|
|
|
|
|
All other brands
|
|
|
0.8
|
|
1.0
|
%
|
Base business net sales increase
|
|
$
|
11.0
|
|
3.1
|
%
|
|
(1)
|
|
Includes net sales for multiple brands acquired as part of the spices & seasonings acquisition that we completed on November 21, 2016. Does not include net sales for
Mrs. Dash
and our other legacy spices & seasonings brands.
|
Gross Profit.
Gross profit was $81.2 million for the second quarter of 2018 compared to $104.6 million for the second quarter of 2017. Gross profit expressed as a percentage of net sales decreased to 20.9% in the second quarter of 2018 from 28.9% in the second quarter of 2017. Gross profit as a percentage of net sales was 26.1% for the quarter, excluding the negative impact of $20.1 million of non-recurring expenses, including the non-cash accounting impact of our inventory reduction plan, and acquisition-related expenses, including
Back to Nature
integration expenses. Gross profit percentage was also negatively impacted by industry-wide and anticipated increases in freight expenses, partially offset by procurement savings, a decrease in warehousing expenses and an increase in net pricing.
Selling, General and Administrative Expenses.
Selling, general and administrative expenses decreased $6.3 million, or 14.5%, to $37.3 million for the second quarter of 2018 from $43.6 million for the second quarter of 2017. The decrease was composed of a decrease in acquisition-related and non-recurring expenses of $5.8 million and reduced consumer marketing expenses of $2.3 million, partially offset by other increases of $1.8 million. Expressed as a percentage of net sales, selling, general and administrative expenses improved by 2.4 percentage points to 9.6% for the second quarter of 2018 compared to 12.0% for the second quarter of 2017.
Amortization Expense.
Amortization expense increased $0.3 million to $4.6 million for the second quarter of 2018 from $4.3 million for the second quarter of 2017 due to the
Back to Nature
acquisition completed in fiscal 2017.
Operating Income.
As a result of the foregoing, operating income decreased $17.4 million, or 30.7%, to $39.3 million for the second quarter of 2018 from $56.7 million for the second quarter of 2017. Operating income expressed as a percentage of net sales decreased to 10.1% in the second quarter of 2018 from 15.7% in the second quarter of 2017.
Net Interest Expense.
Net interest expense increased $5.6 million, or 25.5%, to $27.6 million for the second quarter of 2018 from $22.0 million in the second quarter of 2017. The increase was primarily attributable to additional
borrowings made in the fourth quarter of 2017 to fund the
Back to Nature
acquisition and in the second and fourth quarters of 2017 in connection with our senior notes offerings. See “—Liquidity and Capital Resources —
Debt
” below.
Loss on Extinguishment of Debt.
Loss on extinguishment of debt for the second quarter of 2018 includes the write-off of deferred debt financing costs and unamortized discount of $0.4 million and $0.1 million, respectively, relating to the prepayment of $25.0 million aggregate principal amount of our tranche B term loans. Loss on extinguishment of debt for the second quarter of 2017 includes the write-off of deferred debt financing costs and unamortized discount of $0.9 million and $0.2 million, respectively, relating to the repayment of all outstanding borrowings under the tranche A term loans.
Other Expense (Income).
Other expense (income) for the second quarter of 2018 and 2017 includes remeasurement of monetary assets denominated in a foreign currency into U.S. dollars of $1.0 million expense and $0.8 million income, respectively. Other expense (income) for the second quarter of 2018 and 2017 also includes the impact of the newly adopted presentation of net periodic pension cost and net periodic postretirement benefit costs below operating profit, in the amount of $0.6 million income and $0.5 million income, respectively.
Income Tax Expense.
Income tax expense decreased $10.1 million to $2.8 million for the second quarter of 2018 from $12.9 million for the second quarter of 2017. Our effective tax rate was 25.8% for the second quarter of 2018 and 36.8% for the second quarter of 2017. See “U.S. Tax Act” above.
First two quarters of 2018 compared to the first two quarters of 2017
Net Sales.
Net sales increased $46.1 million, or 6.0%, to $820.1 million for the first two quarters of 2018 from $774.0 million for the first two quarters of 2017. Net sales of
Back to Nature
, acquired on October 2, 2017, contributed $37.7 million to our overall net sales for the first two quarters of 2018.
Base business net sales increased $12.1 million, or 1.6%, to $781.3 million from $769.2 million for the first two quarters of 2017. The $12.1 million increase was attributable to an increase in net pricing of $5.5 million, or 0.7%, and unit volume of $6.7 million.
Net sales of
Green Giant
frozen for the first two quarters of 2018 increased $24.6 million, or 15.9%, compared to the first two quarters of 2017. This growth was driven by
Green Giant
frozen innovation products. Other brands that performed well during the first two quarters include Pirate Brands, whose net sales increased 10.3%,
Victoria
, whose net sales increased 7.5%,
Cream of Wheat
, whose net sales increased 4.9%,
Static Guard
, whose net sales increased 28.7%, and
Ortega
, whose net sales increased by 1.3%. This performance was offset, in part, by
Green Giant
shelf stable, whose net sales decreased 19.8%,
Las Palmas
, whose net sales decreased 10.2%,
Bear Creek Country Kitchens
, whose net sales decreased 8.1%, and
Mama Mary’s
, whose net sales decreased 7.3%.
See Note 15, “Net Sales by Brand,” to our unaudited consolidated interim financial statements in Part I, Item 1 of this report, for detailed information regarding total net sales for each of our brands whose net sales for the first two quarters of 2018 or fiscal 2017 represent 3% or more of our total net sales for those periods and for “all other brands” in the aggregate. The following chart sets forth the most significant base business net sales increases and decreases by brand for those brands for the first two quarters of 2018:
|
|
|
|
|
|
|
|
|
Base Business
|
|
|
|
Net Sales Increase (Decrease)
|
|
|
|
Dollars
(in millions)
|
|
Percentage
|
|
Brand:
|
|
|
|
|
|
|
Green Giant
- frozen
|
|
$
|
24.6
|
|
15.9
|
%
|
Pirate Brands
|
|
|
4.3
|
|
10.3
|
%
|
Cream of Wheat
|
|
|
1.4
|
|
4.9
|
%
|
Ortega
|
|
|
0.9
|
|
1.3
|
%
|
|
|
|
|
|
|
|
Green Giant
- shelf stable
|
|
|
(9.6)
|
|
(19.8)
|
%
|
Spices & Seasonings
(1)
|
|
|
(3.9)
|
|
(3.0)
|
%
|
Bear Creek Country Kitchens
|
|
|
(1.3)
|
|
(8.1)
|
%
|
Maple Grove Farms of Vermont
|
|
|
(0.9)
|
|
(2.6)
|
%
|
Mrs. Dash
|
|
|
(0.1)
|
|
(0.3)
|
%
|
|
|
|
|
|
|
|
All other brands
|
|
|
(3.3)
|
|
(1.5)
|
%
|
Base business net sales increase
|
|
$
|
12.1
|
|
1.6
|
%
|
|
(1)
|
|
Includes net sales for multiple brands acquired as part of the spices & seasonings acquisition that we completed on November 21, 2016. Does not include net sales for Mrs. Dash and our other legacy spices & seasonings brands.
|
Gross Profit.
Gross profit was $184.5 million for the first two quarters of 2018 compared to $225.8 million for the first two quarters of 2017. Gross profit expressed as a percentage of net sales decreased to 22.5% in the first two quarters of 2018 from 29.2% in the first two quarters of 2017. Gross profit as a percentage of net sales was 26.9% for the first two quarters, excluding the negative impact of $36.2 million of non-recurring expenses, including the non-cash accounting impact of our inventory reduction plan, and acquisition-related expenses, including
Back to Nature
integration expenses. Gross profit percentage was also negatively impacted by industry-wide and anticipated increases in freight expenses, partially offset by procurement savings, a decrease in warehousing expenses and an increase in net pricing.
Selling, General and Administrative Expenses.
Selling, general and administrative expenses decreased $12.3 million, or 13.3%, to $79.8 million for the first two quarters of 2018 from $92.1 million for the first two quarters of 2017. The decrease was composed of a decrease in acquisition-related and non-recurring expenses of $11.2 million, reduced consumer marketing expenses of $4.1 million and reduced warehousing expenses of $0.7 million, partially offset by other increases of $3.7 million. Expressed as a percentage of net sales, selling, general and administrative expenses improved by 2.3 percentage points to 9.7% for the first two quarters of 2018 compared to 12.0% for the first two quarters of 2017.
Amortization Expense.
Amortization expense increased $0.5 million to $9.2 million for the first two quarters of 2018 from $8.7 million for the first two quarters of 2017 due to the
Back to Nature
acquisition completed in fiscal 2017.
Operating Income.
As a result of the foregoing, operating income decreased $29.4 million, or 23.6%, to $95.5 million for the first two quarters of 2018 from $124.9 million for the first two quarters of 2017. Operating income expressed as a percentage of net sales decreased to 11.6% in the first two quarters of 2018 from 16.1% in the first two quarters of 2017.
Net Interest Expense.
Net interest expense increased $14.3 million, or 34.3%, to $55.9 million for the first two quarters of 2018 from $41.6 million in the first two quarters of 2017. The increase was primarily attributable to additional borrowings made in the fourth quarter of 2017 to fund the
Back to Nature
acquisition and in the second and fourth quarters of 2017 in connection with our senior notes offerings. See “—Liquidity and Capital Resources —
Debt
” below.
Loss on Extinguishment of Debt.
Loss on extinguishment of debt for the first two quarters of 2018 includes the write-off of deferred debt financing costs and unamortized discount of $2.8 million and $0.5 million, respectively, relating to the prepayment of $150.0 million aggregate principal amount of our tranche B term loans. Loss on extinguishment of debt for the first two quarters of 2017 includes the write-off of deferred debt financing costs and
unamortized discount of $0.9 million and $0.2 million, respectively, relating to the repayment of all outstanding borrowings under the tranche A term loans.
Other Income.
Other income for the first two quarters of 2018 and 2017 includes remeasurement of monetary assets denominated in a foreign currency into U.S. dollars of $0.5 million and $3.0 million, respectively. Other income for the first two quarters of 2018 and 2017 also includes the impact of the newly adopted presentation of net periodic pension cost and net periodic postretirement benefit costs below operating profit, in the amount of $1.2 million and $0.9 million, respectively.
Income Tax Expense.
Income tax expense decreased $21.8 million to $9.4 million for the first two quarters of 2018 from $31.2 million for the first two quarters of 2017. Our effective tax rate was 24.7% for the first two quarters of 2018 and 36.2% for the first two quarters of 2017. See “U.S. Tax Act” above.
Liquidity and Capital Resources
Our primary liquidity requirements include debt service, capital expenditures and working capital needs. See also, “Dividend Policy” and “Commitments and Contractual Obligations” below. We fund our liquidity requirements, as well as our dividend payments and financing for acquisitions, primarily through cash generated from operations and external sources of financing, including our revolving credit facility.
Cash Flows
Net cash provided by operating activities increased $85.0 million to $104.8 million for the first two quarters of 2018 from $19.8 million for the first two quarters of 2017. The increase in net cash provided by operating activities primarily reflects favorable working capital (comprised of changes in inventories, accounts receivable and accrued expenses) comparisons to the first two quarters of 2017. This increase is mainly due to a decrease in inventory and the timing of payments received in 2017 from post-acquisition transition services agreements. The inventory reduction in the first two quarters of 2018 is primarily attributable to our inventory reduction plan.
Net cash used in investing activities for the first two quarters of 2018 decreased $7.6 million to $17.2 million from $24.8 million for the first two quarters of 2017. The decrease was attributable to a decrease in capital spending, partially offset by the proceeds from the sale of assets in 2017. Capital expenditures in the first two quarters 2018 and 2017 included expenditures for building improvements, purchases of manufacturing and computer equipment and capitalized interest. During the first two quarters of 2017, we sold to a third-party co-packer our Le Sueur, Minnesota research center, including the seed technology assets, property, plant and equipment, which we acquired as part of the
Green Giant
acquisition, resulting in a $1.6 million loss on sale of assets.
Net cash used in financing activities for the first two quarters of 2018 was $232.2 million compared to net cash provided by financing activities of $28.0 million for the first two quarters of 2017. Net cash used in financing activities for the first two quarters of 2018 consisted of the $150.0 million optional prepayment of our tranche B term loans, $61.9 million of dividend payments, $18.5 million of payments for the repurchase of common stock and $1.8 million of payments of tax withholding on behalf of employees for net share settlement of share based compensation. Net cash provided by financing activities for the first two quarters of 2017 consisted of $500.0 million of proceeds from the issuance of our 5.25% senior notes and $55.0 million of revolving credit facility borrowings, partially offset by $233.6 million repayment of our tranche A term loans, $221.0 million of repayments of revolving credit facility borrowings, $61.8 million of dividend payments, $8.6 million of debt financing costs and $2.0 million of payments of tax withholding on behalf of employees for net share settlement of share based compensation.
We believe that we will realize a benefit to our cash taxes payable from amortization of our trademarks, goodwill and other intangible assets for the taxable years 2018 through 2032. If there is a change in U.S. federal tax policy that reduces any of these available deductions or results in an increase in our corporate tax rate, our cash taxes payable may increase further, which could significantly reduce our future liquidity and impact our ability to make interest and dividend payments.
Dividend Policy
Our dividend policy reflects a basic judgment that our stockholders are better served when we distribute a substantial portion of our cash available to pay dividends to them instead of retaining it in our business. Under this policy, a substantial portion of the cash generated by our company in excess of operating needs, interest and principal payments on indebtedness, capital expenditures sufficient to maintain our properties and other assets is distributed as regular quarterly cash dividends to the holders of our common stock and not retained by us. We have paid dividends every quarter since our initial public offering in October 2004.
For the first two quarters of 2018 and 2017, we had net cash provided by operating activities of $104.8 million and $19.8 million, respectively, and distributed as dividends $61.9 million and $61.8 million, respectively. Based upon our current dividend rate of $1.88 per share per annum, we expect our aggregate dividend payments in fiscal 2018 to be approximately $124.5 million.
Our dividend policy is based upon our current assessment of our business and the environment in which we operate, and that assessment could change based on competitive or other developments (which could, for example, increase our need for capital expenditures or working capital), new acquisition opportunities or other factors. Our board of directors is free to depart from or change our dividend policy at any time and could do so, for example, if it was to determine that we have insufficient cash to take advantage of growth opportunities.
Acquisitions
Our liquidity and capital resources have been significantly impacted by acquisitions and may be impacted in the foreseeable future by additional acquisitions. As discussed elsewhere in this report, as part of our growth strategy we plan to expand our brand portfolio with disciplined acquisitions of complementary brands. We have historically financed acquisitions by incurring additional indebtedness, issuing equity and/or using cash flows from operating activities. Our interest expense has over time increased as a result of additional indebtedness we have incurred in connection with acquisitions and will increase with any additional indebtedness we may incur to finance future acquisitions. Although we may subsequently issue equity and use the proceeds to repay all or a portion of the additional indebtedness incurred to finance an acquisition and reduce our interest expense, the additional shares of common stock would increase the amount of cash flows from operating activities necessary to fund dividend payments.
We financed the
McCann’s
acquisition, completed in July 2018, and the
Back to Nature
acquisition, completed in October 2017, with cash on hand and additional revolving loans under our existing credit facility. The impact of future acquisitions, whether financed with additional indebtedness or otherwise, may have a material impact on our liquidity and capital resources.
Debt
Senior Secured Credit Agreement.
In fiscal 2017, we refinanced our senior secured credit facility twice by amending and restating our senior secured credit agreement, first on March 30, 2017, and again on November 20, 2017.
The first refinancing, on March 30, 2017, reduced by 0.75% the spread over LIBOR or the applicable base rate on the then-outstanding $640.1 million of tranche B term loans.
On April 3, 2017, we repaid all of the outstanding borrowings and amounts due under our revolving credit facility and tranche A term loans using a portion of the net proceeds of our registered public offering of $500.0 million aggregate principal amount of 5.25% senior notes due 2025.
On November 20, 2017, we again refinanced our senior secured credit facility. This second refinancing increased the principal amount of the tranche B term loans by $10.0 million to $650.1 million, reduced by 25 basis points the spread over LIBOR or the applicable base rate on the tranche B term loans and any revolving loans, increased the aggregate commitments under our revolving credit facility from $500.0 million to $700.0 million, and extended the maturity date applicable to our revolving credit facility from June 2019 to November 2022.
We made optional prepayments of aggregate principal amount of our tranche B term loans of $125.0 million in the first quarter of 2018 and $25.0 million in the second quarter of 2018. At June 30, 2018, $500.1 million of tranche B term loans and no amount of revolving loans were outstanding under our credit agreement. During the third quarter of 2018, we made additional borrowings of revolving loans to fund the
McCann’s
acquisition. As a result, as of the date of this report, $35.0 million of revolving loans were outstanding.
Our credit agreement is secured by substantially all of our and our domestic subsidiaries’ assets except our and our domestic subsidiaries’ real property.
As of the date of this report, the available borrowing capacity under our revolving credit facility, net of outstanding letters of credit of $2.2 million, was $662.8 million. Proceeds of the revolving credit facility may be used for general corporate purposes, including acquisitions of targets in the same or a similar line of business as our company, subject to specified criteria. The revolving credit facility matures on November 21, 2022.
The entire $500.1 million principal amount of tranche B term loans outstanding are due and payable at maturity on November 2, 2022.
Interest under the revolving credit facility, including any outstanding letters of credit is determined based on alternative rates that we may choose in accordance with the credit agreement, including a base rate per annum plus an applicable margin ranging from 0.25% to 0.75%, and LIBOR plus an applicable margin ranging from 1.25% to 1.75%, in each case depending on our consolidated leverage ratio.
Interest under the tranche B term loan facility is determined based on alternative rates that we may choose in accordance with the credit agreement, including a base rate per annum plus an applicable margin of 1.00%, and LIBOR plus an applicable margin of 2.00%. At June 30, 2018, the tranche B term loan interest rate was approximately 4.09%.
For further information regarding our credit agreement, including a description of optional and mandatory prepayment terms, and financial and restrictive covenants, see Note 6, “Long-Term Debt,” to our unaudited consolidated interim financial statements in Part I, Item 1 of this report.
4.625% Senior Notes due 2021.
On June 4, 2013, we issued $700.0 million aggregate principal amount of 4.625% senior notes due 2021 at a price to the public of 100% of their face value. We used the net proceeds from the issuance of the 4.625% senior notes to purchase or redeem all $248.5 million principal amount of our then existing 7.625% senior notes due 2018, to repay $222.2 million principal amount of our then existing tranche B term loans and approximately $40.0 million principal amount of revolving loans under our then existing credit agreement, and to pay related premiums, fees and expenses. We used the remaining net proceeds for our acquisition of Pirate Brands, completed in July 2013.
Interest on the 4.625% senior notes is payable on June 1 and December 1 of each year. The 4.625% senior notes will mature on June 1, 2021, unless earlier retired or redeemed as permitted or required by the terms of the indenture governing the 4.625% senior notes as described in Note 6, “Long-Term Debt,” to our unaudited consolidated interim financial statements in Part I, Item 1 of this report.
We may also, from time to time, seek to retire the 4.625% senior notes through cash repurchases of the 4.625% senior notes and/or exchanges of the 4.625% senior notes for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
See Note 6, “Long-Term Debt,” to our unaudited consolidated interim financial statements in Part I, Item 1 of this report for a more detailed description of the 4.625% senior notes.
5.25% Senior Notes due 2025.
On April 3, 2017, we issued $500.0 million aggregate principal amount of 5.25% senior notes due 2025 at a price to the public of 100% of their face value. On November 20, 2017, we issued an additional $400.0 million aggregate principal amount of 5.25% senior notes due 2025 at a price to the public 101% of their face value plus accrued interest from October 1, 2017, which equates to a yield to worst of 5.03%. The notes issued in November were issued as additional notes under the same indenture as our 5.25% senior notes due 2025 that were issued in April, and, as such, form a single series and trade interchangeably with the previously issued 5.25% senior notes.
We used the net proceeds of the April offering to repay all of the outstanding borrowings and amounts due under our revolving credit facility and tranche A term loans, and to pay related fees and expenses. We used the net proceeds of the November offering to repay all of the then outstanding borrowings and amounts due under our revolving credit facility and to pay related fees and expenses. We have used a portion of, and intend to use the remaining portion of, the net proceeds of the April and November offerings for general corporate purposes, which have included and could include, among other things, repayment of other long term debt or possible acquisitions.
Interest on the 5.25% senior notes is payable on April 1 and October 1 of each year, commencing October 1, 2017. The 5.25% senior notes will mature on April 1, 2025, unless earlier retired or redeemed as permitted or required by the terms of the indenture governing the 5.25% senior notes as described in Note 6, “Long-Term Debt,” to our unaudited consolidated interim financial statements in Part I, Item 1 of this report.
We may also, from time to time, seek to retire the 5.25% senior notes through cash repurchases of the 5.25% senior notes and/or exchanges of the 5.25% senior notes for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
See Note 6, “Long-Term Debt,” to our unaudited consolidated interim financial statements in Part I, Item 1 of this report for a more detailed description of the 5.25% senior notes.
Stock Repurchase Program
On March 13, 2018, our board of directors authorized a stock repurchase program for the repurchase of up to $50.0 million of the company’s common stock through March 15, 2019. Under the authorization, the company may purchase shares of common stock from time to time in the open market or in privately negotiated transactions in compliance with the applicable rules and regulations of the Securities and Exchange Commission (SEC).
The timing and amount of stock repurchases under the program will be at the discretion of management, and will depend on available cash, market conditions and other considerations. Therefore, we cannot assure you as to the number or aggregate dollar amount of shares that will be repurchased under the repurchase program. We may discontinue the program at any time. Any shares repurchased pursuant to the repurchase program will be cancelled.
During the second quarter of 2018, we repurchased and retired 694,749 shares of common stock at an average price per share (excluding fees and commissions) of $26.65, or $18.5 million in the aggregate. As of June 30, 2018, we had $31.5 million available for future repurchases of common stock under the stock repurchase program. We did not repurchase any shares of common stock during the first quarter of 2018 or the first two quarters of 2017. See Note 10, “Pension Benefits,” to our unaudited consolidated interim financial statements in Part I, Item 1 of this report for disclosure relating to shares of the company’s common stock purchased by our defined benefit pension plans.
Future Capital Needs
On June 30, 2018, our total long-term debt of $2,073.9 million, net of our cash and cash equivalents of $62.8 million, was $2,011.1 million. Stockholders’ equity as of that date was $827.0 million.
Our ability to generate sufficient cash to fund our operations depends generally on our results of operations and the availability of financing. Our management believes that our cash and cash equivalents on hand, cash flow from operating activities and available borrowing capacity under our revolving credit facility will be sufficient for the foreseeable future to fund operations, meet debt service requirements, fund capital expenditures, make future acquisitions, if any, and pay our anticipated quarterly dividends on our common stock.
We expect to make capital expenditures of approximately $50.0 million in the aggregate during fiscal 2018, $17.2 million of which were made during the first two quarters. Our projected capital expenditures for fiscal 2018 include anticipated capital expenditures of approximately $4.0 million for new productivity projects, $5.5 million to fund infrastructure optimization projects, $3.6 million for IT infrastructure including cyber security, and approximately $12.4 million in connection with the implementation of a new enterprise resource planning (ERP) system.
Seasonality
Sales of a number of our products tend to be seasonal and may be influenced by holidays, changes in seasons or certain other annual events. In general, our sales are higher during the first and fourth quarters.
We purchase most of the produce used to make our frozen and shelf-stable vegetables, shelf-stable pickles, relishes, peppers, tomatoes and other related specialty items during the months of June through October, and we generally purchase the majority of our maple syrup requirements during the months of April through August. Consequently, our liquidity needs are greatest during these periods.
Inflation
See “—General—
Fluctuations in Commodity Prices and Production and Distribution Costs
” above.
Contingencies
See Note 11, “Commitments and Contingencies,” to our unaudited consolidated interim financial statements in Part I, Item 1 of this report.
Recent Accounting Pronouncements
See Note 2, “Summary of Significant Accounting Policies —
Newly Adopted Accounting Standards
”
and
“—Recently Issued Accounting Standards
,” to our unaudited consolidated interim financial statements in Part I, Item 1 of this report.
Off-balance Sheet Arrangements
As of June 30, 2018, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
Commitments and Contractual Obligations
Our contractual obligations and commitments principally include obligations associated with our outstanding indebtedness, future minimum operating lease obligations and future pension obligations. During the first two quarters of 2018, except for the prepayment of a portion of our tranche B term loans, see “—Debt” above, there were no material changes outside the ordinary course of business in the specified contractual obligations set forth in the Commitments and Contractual Obligations table in our 2017 Annual Report on Form 10-K.
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,” “anticipates,” “plans,” “expects,” “intends,” “estimates,” “projects” and similar expressions 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;
|
|
·
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|
the impact to our business and our financial results of the U.S. Tax Act;
|
|
·
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|
the effects of rising costs for raw materials, packaging, ingredients and distribution;
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·
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crude oil prices and their impact on distribution, packaging and energy costs;
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·
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our ability to successfully implement sales price increases and cost saving measures to offset any cost increases;
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·
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intense competition, changes in consumer preferences, demand for our products and local economic and market conditions;
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·
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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;
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·
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the risks associated with the expansion of our business;
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·
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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;
|
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·
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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;
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·
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unanticipated expenses, including, without limitation, litigation or legal settlement expenses;
|
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·
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the effects of currency movements of the Canadian dollar and the Mexican peso as compared to the U.S. dollar;
|
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·
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|
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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·
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future impairments of our goodwill and intangible assets;
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·
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|
our ability to successfully implement a new enterprise resource planning (ERP) system;
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·
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our ability to protect information systems against, or effectively respond to, a cybersecurity incident or other disruption;
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·
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our sustainability initiatives and changes to environmental laws and regulations;
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·
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other factors that affect the food industry generally, including:
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·
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recalls 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;
|
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·
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|
competitors’ pricing practices and promotional spending levels;
|
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·
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fluctuations 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
|
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·
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the 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
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·
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other factors discussed elsewhere in this report and in our other public filings with the SEC, including under Item 1A, “Risk Factors,” in our 2017 Annual Report on Form 10-K.
|
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, including factors disclosed elsewhere in this section of this report. 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.
Item 3.
Quantitative and Qualitative Disclosures About Market Ris
k
Our principal market risks are exposure to changes in commodity prices, interest rates on borrowings and foreign currency exchange rates and market fluctuation risks related to our defined benefit pension plans.
Commodity Prices and Inflation.
The information under the heading “General—
Fluctuations in Commodity Prices and Production and Distribution Costs
” in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is incorporated herein by reference.
Interest Rate Risk.
In the normal course of operations, we are exposed to market risks relating to our long-term debt arising from adverse changes in interest rates. Market risk is defined for these purposes as the potential change in the fair value of a financial asset or liability resulting from an adverse movement in interest rates.
Changes in interest rates impact our fixed and variable rate debt differently. For fixed rate debt, a change in interest rates will only impact the fair value of the debt, whereas for variable rate debt, a change in the interest rates will impact interest expense and cash flows. At June 30, 2018, we had $1,600.0 million of fixed rate debt and $500.1 million of variable rate debt.
Based upon our principal amount of long-term debt outstanding at June 30, 2018, a hypothetical 1.0% increase or decrease in interest rates would have affected our annual interest expense by approximately $5.0 million.
The carrying values and fair values of our revolving credit loans, term loans, 4.625% senior notes and 5.25% senior notes as of June 30, 2018 and December 30, 2017 are as follows (in thousands):
|
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|
|
|
|
|
|
|
|
|
|
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June 30, 2018
|
|
|
December 30, 2017
|
|
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Revolving credit loans
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Tranche B term loans due 2022
|
|
|
498,526
|
(2)
|
|
500,395
|
(1)
|
|
647,831
|
(2)
|
|
652,689
|
(1)
|
4.625% senior notes due 2021
|
|
|
700,000
|
|
|
688,625
|
(4)
|
|
700,000
|
|
|
710,500
|
(4)
|
5.25% senior notes due 2025
|
|
|
903,640
|
(3)
|
|
851,681
|
(4)
|
|
903,910
|
(3)
|
|
919,729
|
(4)
|
|
(1)
|
|
Fair values are estimated based on Level 2 inputs, which were quoted prices for identical or similar instruments in markets that are not active.
|
|
(2)
|
|
The carrying values of the tranche B term loans are net of discount. At June 30, 2018 and December 30, 2017, the face amounts of the tranche B term loans were $500.1 million and $650.1 million, respectively.
|
|
(3)
|
|
The carrying values of the 5.25% senior notes due 2025 include a premium. At June 30, 2018 and December 30, 2017 the face amount of the 5.25% senior notes due 2025 was $900.0 million.
|
|
(4)
|
|
Fair values are estimated based on quoted market prices.
|
Cash and cash equivalents, trade accounts receivable, income tax receivable/payable, trade accounts payable, accrued expenses and dividends payable are reflected on our consolidated balance sheets at carrying value, which approximates fair value due to the short-term nature of these instruments.
For more information, see Note 6, “Long-Term Debt,” to our unaudited consolidated interim financial statements in Part I, Item 1 of this report.
Foreign Currency Risk
. Our foreign sales are primarily to customers in Canada. Our sales to Canada are generally denominated in Canadian dollars and our sales for export to other countries are generally denominated in U.S. dollars. During the first two quarters of 2018, our net sales to customers in foreign countries represented approximately 6.9% of our total net sales. During the first two quarters of 2017, our net sales to customers in foreign countries represented approximately 7.1% of our total net sales. We also purchase certain raw materials from foreign suppliers. For example, we purchase a significant majority of our maple syrup requirements from suppliers in Québec, Canada. These purchases are made in Canadian dollars. A weakening of the U.S. dollar in relation to the Canadian dollar would significantly increase our future costs relating to the production of our maple syrup products to the extent we have not purchased Canadian dollars or otherwise entered into a currency hedging arrangement in advance of any such weakening of the U.S. dollar. Our purchases of raw materials from other foreign suppliers are generally denominated in U.S. dollars, but certain purchases of raw materials in Mexico are denominated in Mexican pesos.
As a result, certain revenues and expenses have been, and are expected to be, subject to the effect of foreign currency fluctuations, and these fluctuations may have an adverse impact on operating results.
Market Fluctuation Risks Relating to our Defined Benefit Pension Plans
. See Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies; Use of Estimates” and Note 9, “Pension Benefits,” to our unaudited consolidated interim financial statements in Part I, Item 1 of this report for a discussion of the exposure of our defined benefit pension plan assets to risks related to market fluctuations.
Item 4.
Controls and Procedure
s
Evaluation of Disclosure Controls and Procedures.
As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended, our management, including our chief executive officer and our chief financial officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. As defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, disclosure controls and procedures are controls and other procedures that we use that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and our chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Based on that evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Control Over Financial Reporting
. As required by Rule 13a-15(d) under the Exchange Act, our management, including our chief executive officer and our chief financial officer, also conducted an evaluation of our internal control over financial reporting to determine whether any change in our internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, our chief executive officer and our chief financial officer concluded that, except as described below, there has been no change in our internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
We transitioned our recently acquired spices & seasonings business to a new enterprise resource planning (ERP) system during fiscal 2017. We plan to continue implementing the ERP system throughout the remainder of our businesses over the course of approximately the next two years. In connection with these implementations and resulting business process changes, we continue to review and enhance the design and documentation of our internal control over financial reporting processes to maintain effective controls over our financial reporting.
Inherent Limitations on Effectiveness of Controls.
Our company’s management, including the chief executive officer and chief financial officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be
circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
PART II
OTHER INFORMATIO
N
Item 1.
Legal Proceeding
s
The information set forth under the heading “
Legal Proceedings
” in Note 11 to our unaudited consolidated financial statements in Part I, Item 1 of this quarterly report on Form 10-Q is incorporated herein by reference.
Item 1A.
Risk Factor
s
We do not believe there have been any material changes in our risk factors as previously disclosed in our 2017 Annual Report on Form 10-K.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceed
s
Recent Sales of Unregistered Securities
We did not issue any unregistered securities during the second quarter of 2018.
Issuer Purchases of Equity Securities
A summary of our common stock purchased by the company and our defined benefit pension plans during the second quarter of 2018 is set forth in the table below.
(1)
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Total Number of Shares Repurchased
|
|
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
|
|
April 1, 2018 - April 28, 2018
|
|
-
|
|
|
$
|
-
|
|
-
|
|
$
|
50,000,000
|
|
April 29, 2018 – May 26, 2018
|
|
694,749
|
1
|
|
$
|
26.65
|
|
694,749
|
|
$
|
31,471,005
|
|
May 27, 2018 - June 30, 2018
|
|
227,667
|
2
|
|
$
|
28.27
|
|
—
|
|
$
|
31,471,005
|
|
Total
|
|
922,416
|
|
|
$
|
27.05
|
|
694,749
|
|
$
|
31,471,005
|
|
|
(1)
|
|
On March 13, 2018, our board of directors authorized a stock repurchase program for the repurchase of up to $50.0 million of the company’s common stock through March 15, 2019. During the second quarter of 2018,
we repurchased and retired 694,749 shares of common stock pursuant to the stock repurchase program.
As of June 30, 2018, we had
$31.5
million available for future purchases of common stock under the stock repurchase program.
|
|
(2)
|
|
During the second quarter of 2018, our defined benefit pension plans purchased 227,667 shares of the company’s common stock. The purchases of shares by our defined benefit pension plans were not made pursuant to our stock repurchase program and therefore do not reduce the amount available for purchase pursuant to our stock repurchase program.
|
Item 3.
Defaults Upon Senior Securitie
s
Not applicable.
Item 4.
Mine Safety Disclosure
s
Not applicable.
Item 5.
Other Informatio
n
Not applicable.
Item 6.
Exhibit
s
SIGNATUR
E
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
Dated: August 6, 2018
|
B&G FOODS, INC.
|
|
|
|
|
|
By:
|
/s/ Bruce C. Wacha
|
|
|
Bruce C. Wacha
Executive Vice President of Finance
and Chief Financial Officer (Principal Financial and Accounting Officer and Authorized Officer)
|
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