BRIDGFORD FOODS CORP
For the period ended Apr 19, 2024. Filed May 31, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Apr 19, 2024 · Filed May 31, 2024
BRID$5.41+2.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-01-26; filed 2024-03-08.
0001493152-24-009386
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-04-19; filed 2024-05-31.
0001493152-24-022237
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 86 previous paragraphs and 111 current paragraphs.
45 unchanged; 27 reworded; 26 added; 13 removed; 1 previous and 13 current paragraphs rearranged.
Tables are not compared: 13 previous and 20 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (26)
Current report
15 of 28
Current report
16 of 28
Current report
17 of 28
Current report
Net sales in the Frozen Food Products segment increased by $1,001 (8.4%) to $12,905 in the second twelve-week period of the 2024 fiscal year compared to the same twelve-week period in fiscal year 2023. The changes in net sales were comprised as follows:
Current report
Net sales in the Snack Food Products segment decreased by $9,197 (21.1%) to $34,409 in the second twelve-week period of the 2024 fiscal year compared to the same twelve-week period in fiscal year 2023. The changes in net sales were comprised as follows:
Current report
18 of 28
Current report
19 of 28
Current report
Results of Operations for the Twenty-Four Weeks Ended April 19, 2024, and April 14, 2023
Current report
Net Sales-Consolidated
Current report
Net sales decreased by $14,976 (12.8%) to $102,156 in the twenty-four-week period ended April 19, 2024, compared to the same period twenty-four-week period in fiscal year 2023. The changes in net sales were comprised as follows:
Current report
Net sales in the Frozen Food Products segment increased by $1,001 (3.8%) to $27,304 in the twenty-four-week period ended April 19, 2024, compared to the same twenty-four-week period in fiscal year 2023. The changes in net sales were comprised as follows:
Current report
The increase in net sales for the twenty-four-week period ended April 19, 2024, primarily relates to higher selling prices per pound coupled with a higher unit sales volume in pounds. The increase in net sales was primarily driven by an increase in volume to institutional customers and an increase in selling prices due to price increases implemented during the fourth quarter of fiscal year 2023. Other institutional Frozen Food Products sales, including sheet dough and rolls, increased 13% by volume while retail sales volume decreased by 11%. Returns activity decreased compared to the same twenty-four-week period in the 2023 fiscal year. Promotional activity was higher as a percentage of sales.
Current report
Net sales in the Snack Food Products segment decreased by $15,977 (17.6%) to $74,852 in the twenty-four-week period ended April 19, 2024, compared to the same twenty-four-week period in fiscal year 2023. The changes in net sales were comprised as follows:
Current report
20 of 28
Current report
Cost of products sold decreased by $9,217 (10.9%) to $75,392 in the twenty-four-week period ended April 19, 2024, compared to the same twenty-four-week period in fiscal year 2023. The gross margin decreased to 26.2% during the fiscal year 2024 period compared to 27.8% in the comparable fiscal year.
Current report
Cost of products sold in the Frozen Food Products segment decreased by $441 (2.2%) to $19,782 in the first twenty-four-week period of the 2024 fiscal year compared to the same twenty-four-week period in fiscal year 2023. Changes in the product mix and lower commodity costs were the primary contributing factors to this decrease. The cost of purchased flour decreased approximately $273 in the first twenty-four-week period of fiscal year 2024 compared to the same twenty-four-week period in fiscal year 2023.
Current report
Cost of products sold in the Snack Food Products segment decreased by $8,776 (13.6%) to $55,610 in the first twenty-four-week period of the 2024 fiscal year compared to the same twenty-four-week period in fiscal year 2023 due to lower sales volume in our direct store delivery distribution channel. The decrease in cost of goods sold due to the volume decrease was partially offset by an increase in the cost of meat commodities of approximately $2,880 in the twenty-four-week period of fiscal year 2024 compared to the same period in fiscal year 2023 due to higher pressure on the commodity market. We increased our net realizable value reserve by $60 during the twenty-four weeks ended April 19, 2024, in consideration of higher meat commodity costs and lower gross margins. We maintain a net realizable reserve of $385 on products as of April 19, 2024, after determining that the market value on some meat products could not cover the costs associated with completion and sale of the product.
Current report
Selling, general and administrative expenses decreased by $1,734 (5.6%) to $29,001 in the twenty-four-week period ended April 19, 2024, compared to the same twenty-four-week period in the prior fiscal year. The table below summarizes the significant expense increases (decreases) included in this category:
Current report
SG&A expenses in the Frozen Food Products segment decreased by $222 (3.2%) to $6,666 in the first twenty-four-week period of fiscal year 2024 compared to the same twenty-four-week period in the prior fiscal year. The overall decrease in SG&A expenses was due to lower vehicle repairs and maintenance, fuel and computer maintenance and workers’ compensation costs partially offset by higher healthcare costs.
Current report
21 of 28
Current report
SG&A expenses in the Snack Food Products segment decreased by $1,512 (6.3%) to $22,335 in the first twenty-four-week period of fiscal year 2024 compared to the same twenty-four-week period in the prior fiscal year. Most of the decrease was due to the significantly lower unit sales volume in pounds and the corresponding decrease in wages and bonus.
Current report
Income Taxes-Consolidated
Current report
22 of 28
Current report
23 of 28
Current report
24 of 28
Current report
In March 2024, the SEC adopted rules to develop standardized climate-related disclosures by publicly traded companies including the emission of greenhouse gases. The rules are currently effective for the Company in the fiscal years beginning in 2027. However, as a result of pending legal challenges, the actual timing of effectiveness of the rules and applicable phase-in periods, as well as whether portions of the rules remain in effect after the legal challenges, are uncertain. The Company is currently evaluating the guidance and its impact on the financial statements.
Removed paragraphs (13)
Previous report
13 of 25
Previous report
14 of 25
Previous report
15 of 25
Previous report
Net sales in the Frozen Food Products segment remained unchanged at $14,399 in the first twelve-week period of the 2024 fiscal year compared to the same twelve-week period in fiscal year 2023. The changes in net sales were comprised as follows:
Previous report
Net sales in the Snack Food Products segment decreased by $6,780 (14.4%) to $40,443 in the first twelve-week period of the 2024 fiscal year compared to the same twelve-week period in fiscal year 2023. The changes in net sales were comprised as follows:
Previous report
16 of 25
Previous report
17 of 25
Previous report
The principal source of our operating cash flow is cash receipts from the sale of our products, net of costs to manufacture, store, market and deliver such products. We normally fund our operations from cash balances and cash flow generated from operations. However, on June 1, 2022, we received approximately $60,000 in gross proceeds, from the closing of the sale of real property located at 170 N. Green Street in Chicago pursuant to the terms of the Purchase and Sale Agreement dated March 16, 2020, as amended, between Bridgford Food Processing Corporation and CRG Acquisition, LLC (the “CRG Purchase Agreement”). Additionally, we have maintained a revolving line of credit with Wells Fargo Bank, N.A. pursuant to the terms of the credit agreement dated March 1, 2018, as amended to date. We borrowed an aggregate of $18,000 under such revolving line of credit from inception through January 24, 2022. The line of credit was paid off on June 7, 2022, using $18,000 in proceeds from the sale of real property at 170 N. Green Street. The revolving line of credit continued in effect per its terms until November 30, 2023, when it was replaced with a new revolving line of credit as described below. Further, we entered into a bridge loan with Wells Fargo Bank, N.A. on August 30, 2021, for up to $25,000, of which we used $18,653 to pay off a portion of our existing equipment loans as they came out of the lock out period and could be prepaid. We prepaid and terminated the bridge loan on June 2, 2022, using $18,653 in proceeds from the sale of real property at 170 N. Green Street.
Previous report
18 of 25
Previous report
19 of 25
Previous report
Bridge Loan
Previous report
On August 30, 2021, we entered into a loan commitment note for a bridge loan of up to $25,000 to obtain capital to pay off the existing equipment loans as they came out of the lock out period and could be prepaid. The outstanding principal balances of the bridge loan became due and payable in full one Federal Reserve business day after the closing of the real estate transactions contemplated under the CRG Purchase Agreement. We prepaid $18,653 in equipment loans utilizing proceeds from the new bridge loan. The Company evaluated the exchange under ASC 470 and determined that the exchange should be treated as a debt modification prospectively. The Company accounted for this transaction as a debt modification and did not incur any gain or loss relating to the modification. The debt modification did not meet the greater than ten percent test and was deemed not substantial. We prepaid and terminated the bridge loan and related loan commitment note on June 2, 2022, using $18,653 in proceeds from the gain on the sale of a land parcel in Chicago pursuant to the CRG Purchase Agreement.
Reworded paragraphs (27)
Previous wording
Such forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions; macroeconomic conditions, including global financial pressures, inflation, market volatility, and recessionary concerns; success of operating initiatives; development and operating costs; trends impacting the purchasing behavior of our customers and consumers; advertising and promotional efforts; adverse publicity; acceptance of new product offerings; consumer trial and frequency; changes in business strategy or development plans; availability, terms and deployment of capital; availability of qualified personnel; commodity, labor, and employee benefit costs; changes in, or failure to comply with, government regulations; weather conditions, including the effects of climate change and changes in the regulatory environment and consumer demand to mitigate these effects; construction schedules; the impact of the COVID-19 pandemic on our production facilities, supply chain, consumer demand, and cost of products sold; the impact of competitive products and pricing, and other factors referenced in this Report as well as in our other filings with the Securities and Exchange Commission (the “SEC”). Commodity costs have and may continue to fluctuate due to political and economic conditions, including the ongoing conflict between Ukraine and Russia. In addition, actual results may differ as a result of additional risks and uncertainties of which we are currently unaware or which we do not currently view as material to our business.
Current wording
Such forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions; macroeconomic conditions, including global financial pressures, inflation, market volatility, and recessionary concerns; success of operating initiatives; development and operating costs; trends impacting the purchasing behavior of our customers and consumers; advertising and promotional efforts; adverse publicity; acceptance of new product offerings; consumer trial and frequency; changes in business strategy or development plans; availability, terms and deployment of capital; availability of qualified personnel; commodity, labor, and employee benefit costs; changes in, or failure to comply with, government regulations; weather conditions, including the effects of climate change and changes in the regulatory environment and consumer demand to mitigate these effects; construction schedules; the impact of the COVID-19 pandemic on our production facilities, supply chain, consumer demand, and cost of products sold; the impact of competitive products and pricing, and other factors referenced in this Report as well as in our other filings with the Securities and Exchange Commission (the “SEC”). In addition, actual results may differ as a result of additional risks and uncertainties of which we are currently unaware or which we do not currently view as material to our business.
Previous wording
Current accounting principles require that our pension benefit obligation be measured using an internal rate of return (“IRR”) analysis to be included in the discount rate selection process. The IRR calculation for the Retirement Plan for Employees of Bridgford Foods Corporation is measured annually and based on the Citigroup Pension Discount Rate. The Citigroup Pension Discount Rate as of January 31, 2024, was 5.01% as compared to 5.96% as of November 3, 2023. The discount rate applied can significantly affect the value of the projected benefit obligation as well as the net periodic benefit cost.
Current wording
Current accounting principles require that our pension benefit obligation be measured using an internal rate of return (“IRR”) analysis to be included in the discount rate selection process. The IRR calculation for the Retirement Plan for Employees of Bridgford Foods Corporation is measured annually and based on the Citigroup Pension Discount Rate. The Citigroup Pension Discount Rate as of April 30, 2024, was 5.56% as compared to 5.96% as of November 3, 2023. The discount rate applied can significantly affect the value of the projected benefit obligation as well as the net periodic benefit cost.
Previous wording
Our credit risk is diversified across a broad range of customers and geographic regions. Losses due to credit risk have recently been immaterial. The provision for doubtful accounts receivable is based on historical trends and current collection risk. We have significant receivables with a couple of large, well-known customers which, although historically secure, could be subject to material risk should these customers’ operations suddenly deteriorate. We monitor these customers closely to minimize the risk of loss.
Current wording
Our credit risk is diversified across a broad range of customers and geographic regions. Losses due to credit risk have recently been immaterial. The allowance for credit losses on accounts receivable is based on historical trends and current collection risk. We have significant receivables with a couple of large, well-known customers which, although historically secure, could be subject to material risk should these customers’ operations suddenly deteriorate. We monitor these customers closely to minimize the risk of loss.
Previous wording
The table below shows customers that accounted for more than 20% of consolidated accounts receivable (“AR”) or 10% of consolidated sales for the twelve weeks ended January 26, 2024, and January 20, 2023, respectively.
Current wording
The table below shows customers that accounted for more than 20% of consolidated accounts receivable or 10% of consolidated sales for the twelve weeks ended April 19, 2024, and April 14, 2023, respectively.
Previous wording
Our Frozen Food Products segment primarily manufactures and distributes biscuits, bread dough items, roll dough items and shelf stable sandwiches. All items within this segment are considered similar products and have been aggregated at this level. Our frozen food business covers the United States. Products produced by the Frozen Food Products segment are generally supplied to food service and retail distributors who take title to the product upon shipment receipt through Company-leased long-haul vehicles or 3 rd party logistic providers/carriers. We leverage relationships with regional sales managers, and we maintain a network of independent food service and retail brokers covering most of the United States. Brokers are compensated on a commission basis. We believe that our brokers, in close cooperation with our regional sales managers, are a valuable asset providing significant new product and customer opportunities. Regional sales managers perform several significant functions for us, including identifying and developing new business opportunities and providing customer service and support to our distributors and end purchasers often with the assistance of our broker partners.
Current wording
Our Frozen Food Products segment primarily manufactures and distributes biscuits, bread dough items, roll dough items and shelf stable sandwiches. All items within this segment are considered similar products and have been aggregated at this level. Our frozen food business covers the United States. Products produced by the Frozen Food Products segment are generally supplied to food service and retail distributors who take title to the product upon shipment receipt through Company-leased long-haul vehicles or third party logistic providers/carriers. We leverage relationships with regional sales managers, and we maintain a network of independent food service and retail brokers covering most of the United States. Brokers are compensated on a commission basis. We believe that our brokers, in close cooperation with our regional sales managers, are a valuable asset providing significant new product and customer opportunities. Regional sales managers perform several significant functions for us, including identifying and developing new business opportunities and providing customer service and support to our distributors and end purchasers often with the assistance of our broker partners.
Previous wording
Net sales decreased by $6,780 (11.0%) to $54,842 in the first twelve-week period of the 2024 fiscal year compared to the same twelve-week period in fiscal year 2023. The changes in net sales were comprised as follows:
Current wording
Net sales decreased by $8,196 (14.8%) to $47,314 in the second twelve-week period of the 2024 fiscal year compared to the same twelve-week period in fiscal year 2023. The changes in net sales were comprised as follows:
Previous wording
Although net sales for the twelve-week period ended January 26, 2024 remained unchanged compared to the same period in the prior year, lower unit sales volume in pounds was offset by higher selling prices per pound implemented during the third quarter of fiscal 2023. Other institutional Frozen Food Products dollar sales, including sheet dough and rolls, increased 16% and retail dollar sales volume decreased by 16%. We believe demand decreased due to the impact of an inflationary environment on consumer spending habits. Returns activity decreased compared to the same twelve-week period in the 2023 fiscal year. Promotional activity was higher as a percentage of sales.
Current wording
Net sales for the Frozen Food Products segment increased due to higher unit sales volume in pounds and to a lesser extent higher selling prices per pound compared to the same period in the prior year. Other institutional Frozen Food Products dollar sales, including sheet dough and rolls, increased 11% and retail dollar sales volume increased by 1%. We believe demand increased due to continued willingness by consumers to visit foodservice establishments. Returns activity decreased compared to the same twelve-week period in the 2023 fiscal year. Promotional activity was lower during the fiscal year 2024 period as a percentage of sales but higher in absolute dollars.
Previous wording
Net sales of Snack Food Products decreased due to lower unit sales volume in pounds through our direct-store-delivery distribution channel and lower selling prices per pound during the first quarter of fiscal year 2024. We believe demand decreased primarily due to inflationary pressures on consumer spending habits as consumers have pulled back on meat product purchases. The weighted average selling price per pound decreased compared to the same twelve-week period in the prior fiscal year due to changes in product mix. Return activity increased as a percentage of sales and decreased in absolute dollars. Promotional activity was higher than the same twelve-week period in fiscal year 2023.
Current wording
Net sales of Snack Food Products decreased due to lower unit sales volume in pounds through our direct-store-delivery distribution channel and lower selling prices per pound during the second quarter of fiscal year 2024. We believe demand decreased primarily due to inflationary pressures on consumer spending habits as consumers have pulled back on meat product purchases. The weighted average selling price per pound decreased compared to the same twelve-week period in the prior fiscal year due to changes in product mix. Returns activity increased compared to the same twelve-week period in the 2023 fiscal year. Promotional activity was lower than the same twelve-week period in fiscal year 2023.
Previous wording
Cost of products sold decreased by $5,752 (12.9%) to $38,804 in the first twelve-week period of the 2024 fiscal year compared to the same twelve-week period in fiscal year 2023. The gross margin increased slightly to 29.2% in the first twelve-weeks of fiscal year 2024 compared to 27.7% in the same twelve-week period in fiscal year 2023.
Current wording
Cost of products sold decreased by $3,465 (8.7%) to $36,588 in the second twelve-week period of the 2024 fiscal year compared to the same twelve-week period in fiscal year 2023. The gross margin decreased to 22.7% in the second twelve-weeks of fiscal year 2024 compared to 27.8% in the same twelve-week period in fiscal year 2023.
Previous wording
Cost of products sold in the Frozen Food Products segment decreased by $458 (4.3%) to $10,286 in the first twelve-week period of the 2024 fiscal year compared to the same twelve-week period in fiscal year 2023. The cost of purchased flour decreased approximately $139 in the first twelve-week period of fiscal year 2024 compared to the same twelve-week period in fiscal year 2023. Gross overhead increased as a result of continued upward pressures on input costs impacted by inflation. Lower unit sales volume in retail contributed to the decrease in cost of goods sold.
Current wording
Cost of products sold in the Frozen Food Products segment increased by $18 (0.2%) to $9,496 in the second twelve-week period of the 2024 fiscal year compared to the same twelve-week period in fiscal year 2023. The cost of purchased flour decreased approximately $134 in the second twelve-week period of fiscal year 2024 compared to the same twelve-week period in fiscal year 2023. Gross overhead increased as a result of continued upward pressures on input costs impacted by inflation. Higher unit sales volume in pounds contributed to the increase in cost of goods sold partially offset by lower commodity costs.
Previous wording
Cost of products sold in the Snack Food Products segment decreased by $5,294 (15.7%) to $28,518 in the first twelve-week period of the 2024 fiscal year compared to the same twelve-week period in fiscal year 2023 due to lower sales volume in our direct store delivery distribution channel. The cost of significant meat commodities increased approximately $2,222 in the first twelve-week period of fiscal year 2024 compared to the same period in fiscal year 2023. We decreased our net realizable value reserve by $267 during the twelve weeks ended January 26, 2024, to recognize inventory sold through on products already reserved in inventory as of year-end November 3, 2023 and in consideration of higher selling prices on historically lower margin items. We maintain a net realizable reserve of $111 on products as of January 26, 2024, after determining that the market value on some meat products could not cover the costs associated with completion and sale of the product.
Current wording
Cost of products sold in the Snack Food Products segment decreased by $3,483 (11.4%) to $27,092 in the second twelve-week period of the 2024 fiscal year compared to the same twelve-week period in fiscal year 2023 due to lower sales volume in our direct store delivery distribution channel. The cost of significant meat commodities increased approximately $658 in the second twelve-week period of fiscal year 2024 compared to the same period in fiscal year 2023. We increased our net realizable value reserve by $327 during the twelve weeks ended April 19, 2024, in consideration of higher meat commodity costs and lower gross margins. We maintain a net realizable reserve of $385 on products as of April 19, 2024, after determining that the market value on some meat products could not cover the costs associated with completion and sale of the product.
Previous wording
Selling, general and administrative expenses (“SG&A”) decreased by $767 (4.9%) to $15,027 in the first twelve-week period of fiscal year 2024 compared to the same twelve-week period in the prior fiscal year. The table below summarizes the significant expense increases (decreases) included in this category:
Current wording
Selling, general and administrative expenses (“SG&A”) decreased by $967 (6.5%) to $13,974 in the second twelve-week period of fiscal year 2024 compared to the same twelve-week period in the prior fiscal year. The table below summarizes the significant expense increases (decreases) included in this category:
Previous wording
Lower sales commissions due to lower sales volume in pounds resulted in lower wages and bonus expenses in the first twelve weeks of the 2024 fiscal year compared to the same period in the prior year. The decrease in the provision for bad debt was mainly the result of recoveries of losses on older balances. Costs for product advertising decreased mainly as a result of lower payments under brand licensing agreements in the Snack Food Products segment during the twelve weeks ended January 26, 2024. The increase in insurance expenses was driven by higher premiums on property insurance and increased reserves on aged claims. None of the changes individually or as a group of expenses in “Other SG&A” were significant enough to merit separate disclosure. The major components comprising the increase of “Other SG&A” expenses were higher healthcare costs, legal fees, consulting fees and vehicle repairs partially offset by lower workers’ compensation costs.
Current wording
Lower sales commissions due to lower sales volume in pounds resulted in lower wages and bonus expenses in the second twelve weeks of the 2024 fiscal year compared to the same period in the prior year. Costs for product advertising decreased mainly as a result of lower payments under brand licensing agreements in the Snack Food Products segment during the twelve weeks ended April 19, 2024. Rent for storage units that house inventory increased due to inflationary price pressure. None of the changes individually or as a group of expenses in “Other SG&A” were significant enough to merit separate disclosure. The major components comprising the increase of “Other SG&A” expenses were higher vehicle maintenance costs, healthcare costs, legal fees and consulting fees partially offset by lower fuel and workers’ compensation costs.
Previous wording
SG&A expenses in the Frozen Food Products segment decreased by $203 (5.6%) to $3,441 in the first twelve-week period of fiscal year 2024 compared to the same twelve-week period in the prior fiscal year. The overall decrease in SG&A expenses was due to lower product advertising and lower provisions for bad debt.
Current wording
SG&A expenses in the Frozen Food Products segment decreased by $20 (0.6%) to $3,224 in the second twelve-week period of fiscal year 2024 compared to the same twelve-week period in the prior fiscal year. The overall decrease in SG&A expenses was due to lower product advertising and lower building and equipment repairs and maintenance.
Previous wording
SG&A expenses in the Snack Food Products segment decreased by $564 (4.6%) to $11,586 in the first twelve-week period of fiscal year 2024 compared to the same twelve-week period in the prior fiscal year. Most of the decrease was due to lower wages and bonuses, decreased fees paid under brand licensing agreements, lower postage expenses and lower workers’ compensation costs partially offset by higher property insurance expenses and higher outside storage fees.
Current wording
SG&A expenses in the Snack Food Products segment decreased by $947 (8.1%) to $10,750 in the second twelve-week period of fiscal year 2024 compared to the same twelve-week period in the prior fiscal year. Most of the decrease was due to lower wages and bonuses, decreased fees paid under brand licensing agreements, business travel, postage expenses and workers’ compensation costs partially offset by higher vehicle repairs, property insurance expenses and fuel costs.
Previous wording
We recorded a provision for income taxes of $510 and $398 for the twelve-week period ended January 26, 2024 and January 20, 2023, respectively, related to federal and state taxes, based on the Company’s expected annual effective tax rate. The effective income tax rate differed from the applicable mixed statutory rate of approximately 26.4% due to non-deductible meals and entertainment, non-taxable gains and losses on life insurance policies, and state income taxes.
Current wording
We recorded a benefit for income taxes of $877 for the twelve-week period ended April 19, 2024, and a provision for income taxes of $164 for the twelve-week period ended April 14, 2023, related to federal and state taxes, based on the Company’s expected annual effective tax rate. The effective income tax rate differed from the applicable mixed statutory rate of approximately 26.4% due to non-deductible meals and entertainment, non-taxable gains and losses on life insurance policies, and state income taxes.
Previous wording
On November 30, 2023, we entered into a fifth amendment to the credit agreement with Wells Fargo Bank, N.A., and also executed a new revolving line of credit note pursuant to the amendment. Under the terms of this amendment and the revolving line of credit note, we may borrow up to $7,500 from time to time up to November 30, 2024. As of January 26, 2024, we had $1,052 of current debt on equipment loans, $67,747 of net working capital and $7,500 available under our revolving line of credit with Wells Fargo Bank, N.A. Refer to the Notes to the Condensed Consolidated Financial Statements included within this Report for further information. The Company was in compliance with all loan covenants as of January 26, 2024.
Current wording
On November 30, 2023, we entered into a fifth amendment to the credit agreement with Wells Fargo Bank, N.A., and also executed a new revolving line of credit note pursuant to the amendment. Under the terms of this amendment and the revolving line of credit note, we may borrow up to $7,500 from time to time up to November 30, 2024. As of April 19, 2024, we had $1,061 of current debt on equipment loans, $66,238 of net working capital and $7,500 available under our revolving line of credit with Wells Fargo Bank, N.A. Refer to Note 6 to the Condensed Consolidated Financial Statements included within this Report for further information. The Company was in compliance with all loan covenants as of April 19, 2024.
Previous wording
Despite higher commodity costs like we experienced in fiscal year 2022 and again in the first quarter of fiscal 2024, we may not be able to increase our product prices in a timely manner or sufficiently to offset such increased commodity costs due to consumer price sensitivity, pricing in relation to competitors and the reluctance of retailers to accept the price increase. Instances of higher interest rates, labor shortages or supply chain issues could result in material changes in the Company’s liquidity. Higher product prices could potentially lower demand for our product and decrease volume. Management believes there are various options available to generate additional liquidity to repay debt or fund operations such as mortgaging real estate, should that be necessary. Our ability to increase liquidity will depend upon, among other things, our business plans and the performance of operating divisions and economic conditions of capital markets. If we are unable to increase liquidity through mortgaging real estate or additional borrowing, or generate positive cash flow necessary to fund operations, we may not be able to compete successfully, which could negatively impact our business, operations, and financial condition. With the cash expected to be generated from the Company’s operations, we anticipate that we will maintain sufficient liquidity to operate our business for at least the next twelve months. We will continue to monitor the impact of inflation and interest rate volatility on our liquidity and, if necessary, take action to preserve liquidity and ensure that our business can operate during these uncertain times.
Current wording
All of our operating segments have been impacted by inflation, including higher costs for labor, freight and specific materials. We expect this trend to continue through the remainder of fiscal year 2024. Additionally, commodity costs have and may continue to fluctuate due to both political and economic conditions, including the ongoing conflict between Ukraine and Russia. Despite higher commodity costs like we experienced in fiscal year 2022 and again in the first and second quarters of fiscal 2024, we may not be able to increase our product prices in a timely manner or sufficiently to offset such increased commodity or other costs due to consumer price sensitivity, pricing in relation to competitors and the reluctance of retailers to accept the price increase. Instances of higher interest rates, general price inflation or deflation, raw materials costs, labor shortages or supply chain issues could adversely affect the Company’s financial results and its liquidity. Higher product prices could potentially lower demand for our product and decrease volume. Management believes there are various options available to generate additional liquidity to repay debt or fund operations such as mortgaging real estate, should that be necessary. Our ability to increase liquidity will depend upon, among other things, our business plans and the performance of operating divisions and economic conditions of capital markets. If we are unable to increase liquidity through mortgaging real estate or additional borrowing, or generate positive cash flow necessary to fund operations, we may not be able to compete successfully, which could negatively impact our business, operations, and financial condition. With the cash expected to be generated from the Company’s operations, we anticipate that we will maintain sufficient liquidity to operate our business for at least the next twelve months. We will continue to monitor the impact of inflation and interest rate volatility on our liquidity and, if necessary, take action to preserve liquidity and ensure that our business can operate during these uncertain times.
Previous wording
Cash flows from operating activities for the twelve weeks ended:
Current wording
Cash flows from operating activities for the twenty-four weeks ended:
Previous wording
For the twelve weeks ended January 26, 2024, net cash used in operating activities was $703, $1,924 less cash used than during the same period in fiscal year 2023. The decrease in net cash used in operating activities primarily relates to an increase in accounts receivable of $2,329 and an increase in prepaid expenses and other current assets of $1,953, partially offset by net income of $1,235 and lower inventories of $1,298. During the twelve-week period ended January 26, 2024, we did not contribute towards our defined benefit pension plan. Plan funding strategies may be adjusted depending upon economic conditions, investment options, tax deductibility, or recent legislative changes in funding requirements.
Current wording
For the twenty-four weeks ended April 19, 2024, net cash provided by operating activities was $1,002, $295 less cash used than during the same period in fiscal year 2023. The decrease in net cash provided by operating activities primarily relates to a decrease in accounts receivable of $2,962 and a decrease in inventory of $1,298, partially offset by a net loss of $960 and an increase in prepaid expenses and other current assets of $1,373. During the twenty-four-week period ended April 19, 2024, we did not contribute towards our defined benefit pension plan. Plan funding strategies may be adjusted depending upon economic conditions, investment options, tax deductibility, or recent legislative changes in funding requirements.
Previous wording
Our cash conversion cycle (defined as days of inventory and trade receivables less days of trade payables outstanding) was equal to 84 days for the twelve-week period ended January 26, 2024. The increase in the cash conversion cycle from 78 days for the twelve-week period ended January 20, 2023 to 84 days was mainly due to higher average days in inventory. We have increased credit terms to Wal-Mart from 45 days to 65 days during the first quarter of fiscal year 2024.
Current wording
Our cash conversion cycle (defined as days of inventory and trade receivables less days of trade payables outstanding) was equal to 91 days for the twenty-four-week period ended April 19, 2024. The increase in the cash conversion cycle from 80 days for the twenty-four-week period ended April 14, 2023 to 91 days was mainly due to higher average days in inventory and higher days sales outstanding. We have increased credit terms to Wal-Mart from 45 days to 65 days during the first quarter of fiscal year 2024 with no changes to terms during the second quarter of fiscal year 2024.
Previous wording
Cash flows from investing activities for the twelve weeks ended:
Current wording
Cash flows from investing activities for the twenty-four weeks ended:
Previous wording
The table below highlights additions to property, plant and equipment for the twelve weeks ended:
Current wording
The table below highlights additions to property, plant and equipment for the twenty-four weeks ended:
Previous wording
Cash flows from financing activities for the twelve weeks ended:
Current wording
Cash flows from financing activities for the twenty-four weeks ended:
Previous wording
On each of December 26, 2018, April 18, 2019, December 19, 2019, March 5, 2020, and April 17, 2020 (collectively referred to as the “Wells Fargo Loan Agreements”), we entered into master collateral loan and security agreements with Wells Fargo Bank, N.A. Pursuant to the Wells Fargo Loan Agreements, we owe the amounts as stated as equipment notes in the table below.
Current wording
On each of December 26, 2018, April 18, 2019, December 19, 2019, March 5, 2020, and April 17, 2020, we entered into master collateral loan and security agreements with Wells Fargo Bank, N.A. Pursuant to the Wells Fargo Loan Agreements (collectively referred to as the “Wells Fargo Loan Agreements”), we owe the amounts as stated as equipment notes in the table below.
Previous wording
The following table reflects major components of our revolving credit facility and borrowing agreements as of January 26, 2024, and November 3, 2023, respectively.
Current wording
The following table reflects major components of our revolving credit facility and equipment note payable as of April 19, 2024, and November 3, 2023, respectively.
Previous wording
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (ASC 326), which provides guidance on measurement of credit losses on financial instruments. This ASU adds a current expected credit loss impairment model to GAAP that is based on expected losses rather than incurred losses whereby a broader range of reasonable and supportable information is required to be utilized in order to derive credit loss estimates. The effective date of the new guidance as amended by ASU No. 2019-10 is fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company analyzed the impact of adopting this standard and does not expect the adoption to have a material impact on its Consolidated Financial Statements as it has been our policy to estimate and record credit losses on trade accounts receivable.
Current wording
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (ASC 326), which provides guidance on measurement of credit losses on financial instruments. This ASU adds a current expected credit loss impairment model to GAAP that is based on expected losses rather than incurred losses whereby a broader range of reasonable and supportable information is required to be utilized in order to derive credit loss estimates. The effective date of the new guidance as amended by ASU No. 2019-10 is fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of ASU No. 2019 did not have a material or significant impact on its Consolidated Financial Statements as it has been our policy to estimate and record credit losses on trade accounts receivable.
Rearranged current paragraphs (13)
Current report — wording carried from elsewhere
The table below shows customers that accounted for more than 20% of consolidated accounts receivable (“AR”) or 10% of consolidated sales for the twenty-four weeks ended April 19, 2024, and April 14, 2023, respectively.
Current report — wording carried from elsewhere
Net Sales-Frozen Food Products Segment
Current report — wording carried from elsewhere
Net Sales-Snack Food Products Segment
Current report — wording carried from elsewhere
Net sales of Snack Food Products decreased due to lower unit sales volume in pounds through our direct-store-delivery distribution channel and lower selling prices per pound during the twenty-four weeks ended April 19, 2024. We believe demand decreased primarily due to inflationary pressures on consumer spending habits as consumers have pulled back on meat product purchases. The weighted average selling price per pound decreased compared to the same twenty-four-week period in the prior fiscal year due to changes in product mix. Returns activity compared to the same twenty-four-week-period in the 2023 fiscal year. Promotional activity during the fiscal year 2024 period was higher as a percentage of sales but lower in absolute dollars.
Current report — wording carried from elsewhere
Cost of Products Sold and Gross Margin-Consolidated
Current report — wording carried from elsewhere
Cost of Products Sold-Frozen Food Products Segment
Current report — wording carried from elsewhere
Cost of Products Sold-Snack Food Products Segment
Current report — wording carried from elsewhere
Selling, General and Administrative Expenses-Consolidated
Current report — wording carried from elsewhere
Lower sales commissions resulted in lower wages and bonus expenses in the first twenty-four weeks of the 2024 fiscal year compared to the same period in the prior year. Costs for product advertising decreased mainly as a result of lower payments under brand licensing agreements in the Snack Food Products segment during the twenty-four weeks ended April 19, 2024. The decrease in the provision forbad debtwas mainly the result of recoveries of losses on older balances. The increase in insurance expenses was driven by higher premiums on property insurance and increased reserves on aged claims. Rent for storage units that house inventory increased due to inflationary price pressure. Vehicle repairs and maintenance on vehicles have increased compared to the prior year period mainly due to an aging fleet. Outside consulting costs increased due to higher advisory services, inspection and product testing fees. Workers’ compensation costs decreased due to favorable trends in claims experience in the current fiscal year. None of the changes individually or as a group of expenses in “Other SG&A” were significant enough to merit separate disclosure. The major components comprising the increase of “Other SG&A” expenses were higher travel expenses and overnight postage and lower other income.
Current report — wording carried from elsewhere
Selling, General and Administrative Expenses-Frozen Food Products Segment
Current report — wording carried from elsewhere
Selling, General and Administrative Expenses-Snack Food Products Segment
Current report — wording carried from elsewhere
Income tax for the twenty-four weeks ended April 19, 2024, and April 14, 2023, respectively, was as follows:
Current report — wording carried from elsewhere
We recorded a benefit for income taxes of $367 for the twenty-four-week period ended April 19, 2024, and a provision for income taxes of $562 for the twenty-four-week period ended April 14, 2023, related to federal and state taxes, based on the Company’s expected annual effective tax rate. The effective income tax rate differed from the applicable mixed statutory rate of approximately 26.4% due to non-deductible meals and entertainment, non-taxable gains and losses on life insurance policies and state income taxes.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
All of our operating segments have been impacted by inflation, including higher costs for labor, freight, and specific materials. We expect this trend to continue through the remainder of fiscal year 2024. Management is of the opinion that the Company’s financial position and its capital resources are sufficient to provide for its operating needs and capital expenditures for the remainder of fiscal year 2024. However, future volatility of general price inflation or deflation and raw material cost and availability could adversely affect our financial results.