(In thousands, except per share data)
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| · · Third Quarter Ended · · First Three Quarters Ended |
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| · · September 27, · · September 28, · · September 27, · · September 28, |
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| · · 2025 · 2024 · 2025 · 2024 |
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| Net (loss) income | | | $(19,142) | | | $7,464 | | | $(28,079) | | | $(28,837) |
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| (Gain) loss on extinguishment of debt(2) | | | (681) | | | 1,938 | | | (2,754) | | | 1,938 |
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| Accelerated amortization of deferred debt financing costs(3) | | | 289 | | | — | | | 588 | | | 456 |
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| Debt financing costs(4) | | | 28 | | | 1,140 | | | 28 | | | 1,140 |
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| Acquisition/divestiture-related and non-recurring expenses(5) | | | 3,321 | | | 919 | | | 11,022 | | | 4,289 |
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| Impairment of goodwill(6) | | | — | | | — | | | — | | | 70,580 |
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| Impairment of intangible assets(7) | | | 26,000 | | | — | | | 26,000 | | | — |
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| Loss on sales of assets(8) | | | (15,513) | | | — | | | (2,867) | | | 135 |
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| Impairment of property, plant and equipment, net(9) | | | — | | | — | | | 2,994 | | | — |
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| Impairment of assets held for sale(10) | | | 27,800 | | | — | | | 27,800 | | | — |
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| Tax benefit related to IRC Section 987 and other discrete items and tax true-ups(12) | | | (299) | | | (351) | | | (1,296) | | | 646 |
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| Tax effects of non-GAAP adjustments(13) | | | (10,070) | | | (979) | | | (15,366) | | | (19,240) |
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| Adjusted net income(11) | | | $11,733 | | | $10,131 | | | $18,070 | | | $31,107 |
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| Adjusted diluted earnings per share(11) | | | $0.15 | | | $0.13 | | | $0.23 | | | $0.39 |
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| (1) | EBITDA and adjusted EBITDA are non-GAAP financial measures used by management to measure operating performance. A non-GAAP financial measure is defined as a numerical measure of the Company’s financial performance that excludes or includes amounts so as to be different from the most directly comparable measure calculated and presented in accordance with GAAP in the Company’s consolidated balance sheets and related consolidated statements of operations, comprehensive (loss) income, changes in stockholders’ equity and cash flows. The Company defines EBITDA as net income (loss) before net interest expense, income taxes, and depreciation and amortization. The Company defines adjusted EBITDA as EBITDA adjusted for cash and non-cash acquisition/divestiture-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 certain assets); gains and losses on extinguishment of debt; impairment of assets held for sale; impairment of intangible assets; and non-recurring expenses, gains and losses. |
Management believes that it is useful to eliminate these items because it allows management to focus on what it deems to be a more reliable indicator of ongoing operating performance and the Company’s ability to generate cash flow from operations. The Company uses EBITDA and adjusted EBITDA in the Company’s business operations to, among other things, evaluate the Company’s operating performance, develop budgets and measure the Company’s performance against those budgets, determine employee bonuses and evaluate the Company’s cash flows in terms of cash needs. The Company also presents EBITDA and adjusted EBITDA because the Company believes they are useful indicators of the Company’s historical debt capacity and ability to service debt and because covenants in the Company’s credit agreement, the Company’s senior secured notes indenture and the Company’s senior notes indenture contain ratios based on these measures. As a result, reports used by internal management 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 (loss), 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 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 certain costs and expenses and gains and losses described above. 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 the Company’s performance against the Company’s peer companies because management believes these measures provide users with valuable insight into key components of GAAP amounts.
| (2) | Net interest expense for the third quarter and first three quarters of 2025 was reduced by $0.5 million and $2.3 million, respectively, as a result of gains on extinguishment of debt related to the Company’s repurchases of $20.0 million aggregate principal amount and $40.7 million aggregate principal amount, respectively, of its 5.25% senior notes due 2027 in open market purchases during the third quarter and first three quarters of 2025 at discounted repurchase prices, which resulted in pre-tax gains of $0.8 million and $2.9 million, respectively, partially offset by the accelerated amortization of deferred debt financing costs of $0.3 million and $0.6 million, respectively, described in footnote (3) below, for the third quarter and first three quarters of 2025. |
Net interest expense for the third quarter and first three quarters of 2024 includes a loss on extinguishment of debt of $1.9 million, which consists of $1.3 million related to the refinancing of tranche B term loans and $0.6 million related to the refinancing of revolving credit loans.
| (3) | Net interest expense for the third quarter and first three quarters of 2025 includes the accelerated amortization of deferred debt financing costs of $0.3 million (or $0.2 million, net of tax) and $0.6 million (or $0.4 million, net of tax), respectively, resulting from the Company’s repurchases of 5.25% senior notes due 2027 described in footnote (2) above. |
Net interest expense for the first three quarters of 2024 includes the accelerated amortization of deferred debt financing costs of $0.5 million (or $0.3 million, net of tax), resulting from the Company’s prepayment of $21.3 million aggregate principal amount of tranche B term loans and repurchase of $0.7 million aggregate principal amount of 8.00% senior secured notes due 2028 during the second quarter of 2024.
| (4) | Debt financing costs for the third quarter and first three quarters of 2024 and 2025 reflects the portion of debt financing costs incurred in connection with the Company’s refinancing of the Company’s senior secured credit facility that is included in net interest expense for the third quarter and first three quarters of 2024 and 2025. Of the $1.1 million included in net interest expense for the third quarter and first three quarters of 2024, $0.4 million relates to the refinancing of tranche B term loans and $0.7 million relates to the refinancing of revolving credit loans. |
| (5) | Acquisition/divestiture-related and non-recurring expenses primarily include acquisition, integration and divestiture-related expenses for prior and potential future acquisitions and divestitures, and non-recurring expenses. |
| (6) | In connection with the Company’s transition from one reportable segment to four reportable segments during the first quarter of 2024, the Company reassigned assets and liabilities, including goodwill, between four reporting units (which are the same as the Company’s reportable segments). The Company completed a goodwill impairment test, both prior to and subsequent to the change in reporting structure, comparing the fair values of the reporting units to the carrying values. The goodwill impairment test resulted in the Company recognizing pre-tax, non-cash goodwill impairment charges of $70.6 million (or $53.4 million, net of tax) within its Frozen & Vegetables reporting unit during the first quarter of 2024. |
| (7) | During the third quarter of 2025, the Company recorded pre-tax, non-cash impairment charges of $26.0 million (or $19.6 million, net of tax) related to indefinite-lived intangible trademark assets for the Victoria and McCann’s brands. |
| (8) | During the first three quarters of 2025, the Company recognized a net gain on sale of assets of $2.9 million (or $2.1 million, net of tax), which includes a gain on sale of $15.5 million (or $11.6 million, net of tax) for the Le Sueur U.S. divestiture during the third quarter of 2025 and a loss on sale of $12.6 million (or $9.5 million, net of tax) for the Don Pepino divestiture during the second quarter of 2025. |
| (9) | During the first quarter of 2025, the Company recorded pre-tax, non-cash impairment charges of $3.0 million related to property, plant and equipment. |
| (10) | During the third quarter of 2025, the Company reclassified $75.6 million of inventories, $6.3 million of indefinite-lived trademark intangible assets and $3.1 million of finite-lived customer relationship intangible assets related to Green Giant Canada within the Frozen & Vegetables business unit to assets held for sale as of the end of the third quarter of 2025. The Company then measured the assets held for sale at the lower of their carrying value or fair value less the estimated costs to sell, and recorded pre-tax non-cash impairment charges of $27.8 million (or $21.0 million, net of tax) during the third quarter of 2025. |
| (11) | Adjusted net income and adjusted diluted earnings per share are non-GAAP financial measures used by management to measure operating performance. The Company defines adjusted net income and adjusted diluted earnings per share as net income (loss) and diluted earnings (loss) per share adjusted for certain items that affect comparability. These non-GAAP financial measures reflect adjustments to net income (loss) and diluted earnings (loss) per share to eliminate the items identified in the reconciliation above. This information is provided in order to allow investors to make meaningful comparisons of the Company’s operating performance between periods and to view the Company’s business from the same perspective as the Company’s management. Because the Company cannot predict the timing and amount of these items, management does not consider these items when evaluating the Company’s performance or when making decisions regarding allocation of resources. |
| (12) | During the first three quarters of 2025, the Company recorded a net discrete tax benefit of $1.3 million. During the first quarter of 2025, the Company recorded a net discrete tax benefit of $1.4 million, primarily related to a discrete tax benefit of $2.1 million for the tax effect of a pre-transition loss related to Section 987 of the Internal Revenue Code of 1986 for the cumulative unrecognized foreign exchange loss relating to its primary operating subsidiary in Canada, which is a qualified business unit for purposes of Section 987, partially offset by discrete tax expenses of $0.7 million related to stock-based compensation and rate changes. During the second quarter of 2025, the Company recorded other net discrete tax expenses of $0.4 million. During the third quarter of 2025, the Company recorded other net discrete tax benefits of $0.3 million. |
Tax true-up for the third quarter and first three quarters of 2024 relates to return to tax provision adjustments in the U.S., Mexico and Canada.
| (13) | Represents the tax effects of the non-GAAP adjustments listed above, assuming a tax rate of approximately 24.5%. |
