BG Foods Inc

Previous wording

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” before Part I of this report 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 29, 2024 (second quarter and first two quarters of 2024) included elsewhere in this report and the audited consolidated financial statements and related notes for the fiscal year ended December 30, 2023 (fiscal 2023) included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 28, 2024 (which we refer to as our 2023 Annual Report on Form 10-K).

Current wording

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” before Part I of this report 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 thirty-nine weeks ended September 28, 2024 (third quarter and first three quarters of 2024) included elsewhere in this report and the audited consolidated financial statements and related notes for the fiscal year ended December 30, 2023 (fiscal 2023) included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 28, 2024 (which we refer to as our 2023 Annual Report on Form 10-K).

Previous wording

We experienced material net cost increases for raw materials during the last several years due to a number of factors, including the war in Ukraine and the COVID-19 pandemic. Raw material costs remained elevated in fiscal 2023 and the first two quarters of 2024 and we anticipate that certain raw material costs will remain elevated during the remainder of fiscal 2024. We are currently locked into our supply and prices for a majority of our most significant raw material commodities (excluding, among others, oils) through fiscal 2024, and for most of our needs for oils through the third quarter and into the fourth quarter of fiscal 2024.

Current wording

We experienced material net cost increases for raw materials during the last several years due to a number of factors, including the war in Ukraine and the COVID-19 pandemic. Raw material costs remained elevated in fiscal 2023 and the first three quarters of 2024 and we anticipate that certain raw material costs will remain elevated during the remainder of fiscal 2024. We are currently locked into our supply and prices for a majority of our most significant raw material commodities through the remainder of fiscal 2024.

Previous wording

In recent years, we have been negatively impacted by industry-wide increases in the cost of distribution, primarily driven by increased freight rates. Freight rates increased significantly during the fourth quarter of 2020 and throughout fiscal 2021 and fiscal 2022. We attempt to offset all or a portion of these increases through price increases and cost savings initiatives. For example, despite higher rates for freight in 2021 and 2022, we were able to offset a portion of the freight cost increases through pricing, which included both list price increases and trade spend optimization. Although freight rates began to decline in 2023, freight rates remained elevated during the first two quarters of 2024 and we expect freight rates to remain elevated during the remainder of 2024.

Current wording

In recent years, we have been negatively impacted by industry-wide increases in the cost of distribution, primarily driven by increased freight rates. Freight rates increased significantly during the fourth quarter of 2020 and throughout fiscal 2021 and fiscal 2022. We attempt to offset all or a portion of these increases through price increases and cost savings initiatives. For example, despite higher rates for freight in 2021 and 2022, we were able to offset a portion of the freight cost increases through pricing, which included both list price increases and trade spend optimization. Although freight rates began to decline in 2023, freight rates remained elevated during the first three quarters of 2024 and we expect freight rates to remain elevated during the remainder of fiscal 2024 and into fiscal 2025.

Previous wording

*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 2024 and 2023, our net sales to customers in foreign countries represented approximately 8.9% and 8.6%, 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.

Current wording

*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 three quarters of 2024 and 2023, our net sales to customers in foreign countries represented approximately 9.1% and 8.7%, 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.

Previous wording

dollars for consolidation into our consolidated financial statements. For example, our results of operations from ourGreen Giantfrozen operations in Mexico were negatively impacted during fiscal 2023 as a result of the Mexican peso appreciating by approximately 15% against the U.S. dollar during that period.

Current wording

dollars for consolidation into our consolidated financial statements. For example, our results of operations from ourGreen Giantfrozen operations in Mexico were negatively impacted during fiscal 2023 as a result of the Mexican peso appreciating by approximately 15% against the U.S. dollar during that period, and have continued to be negatively impacted during fiscal 2024.

Previous wording

If we are unable to fully utilize our interest expense deductions in future periods, our cash taxes will increase. Beginning with fiscal 2022, our adjusted taxable income as computed for purposes of the interest expense deduction limitation is computed after any deduction allowable for depreciation and amortization. As a result, our adjusted taxable income (used to compute the limitation) decreased and we were subject to the interest expense deduction limitation in fiscal 2023, resulting in an increase to taxable income of $107.7 million. We expect to continue to be subject to the interest deduction limitation in fiscal 2024 and future years. We have recorded a deferred tax asset of $46.9 million for fiscal 2023 related to the interest deduction carryover, without a valuation allowance, as the disallowed interest may be carried forward indefinitely. The increase in our cash taxes resulting from the interest expense deduction limitation was approximately $25.0 million for fiscal 2023. There are various factors that may cause tax assumptions to change in the

Current wording

If we are unable to fully utilize our interest expense deductions in future periods, our cash taxes will increase. Beginning with fiscal 2022, our adjusted taxable income as computed for purposes of the interest expense deduction limitation is computed after any deduction allowable for depreciation and amortization. As a result, our adjusted taxable income (used to compute the limitation) decreased and we were subject to the interest expense deduction limitation in fiscal 2023, resulting in an increase to taxable income of $107.7 million. We expect to continue to be subject to the interest deduction limitation in fiscal 2024 and future years. We have recorded a deferred tax asset of $46.9 million for fiscal 2023 related to the interest deduction carryover, without a valuation allowance, as the disallowed interest may be carried forward indefinitely. The increase in our cash taxes resulting from the interest expense deduction limitation was

Previous wording

future, and we may have to record a valuation allowance against these deferred tax assets. See “—Liquidity and Capital Resources—Cash Flows–Cash Income TaxPayments.”

Current wording

approximately $25.0 million for fiscal 2023. There are various factors that may cause tax assumptions to change in the future, and we may have to record a valuation allowance against these deferred tax assets. See “—Liquidity and Capital Resources—Cash Flows–Cash Income TaxPayments.”

Previous wording

The U.S. Treasury issued several regulations supplementing the U.S. Tax Act in 2018, including detailed guidance clarifying the calculation of the mandatory tax on previously unrepatriated earnings, application of the existing foreign tax credit rules to newly created categories and expanding details for application of the base erosion tax on affiliate payments. These regulations are to be applied retroactively and did not materially impact our tax rates in the first two quarters of 2024 or fiscal 2023.

Current wording

The U.S. Treasury issued several regulations supplementing the U.S. Tax Act in 2018, including detailed guidance clarifying the calculation of the mandatory tax on previously unrepatriated earnings, application of the existing foreign tax credit rules to newly created categories and expanding details for application of the base erosion tax on affiliate payments. These regulations are to be applied retroactively and did not materially impact our tax rates in the first three quarters of 2024 or fiscal 2023.

Previous wording

The following table sets forth the percentages of net sales represented by selected items for the second quarter and first two quarters of 2024 and 2023 reflected in our consolidated statements of operations. The comparisons of financial results are not necessarily indicative of future results:

Current wording

The following table sets forth the percentages of net sales represented by selected items for the third quarter and first three quarters of 2024 and 2023 reflected in our consolidated statements of operations. The comparisons of financial results are not necessarily indicative of future results:

Previous wording

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 GAAP in our consolidated balance sheets and related consolidated statements of operations, comprehensive (loss) income, changes in stockholders’ equity and cash flows.

Current wording

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 GAAP in our consolidated balance sheets and related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity and cash flows.

Previous wording

A reconciliation of net sales to base business net sales for the second quarter and first two quarters of 2024 and 2023 follows (in thousands):

Current wording

A reconciliation of net sales to base business net sales for the third quarter and first three quarters of 2024 and 2023 follows (in thousands):

Previous wording

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 our performance against our peer companies because management believes these measures provide users with valuable insight into key components of GAAP amounts.

Current wording

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 our performance against our peer companies because management believes these measures provide users with valuable insight into key components of GAAP amounts.

Previous wording

Reconciliations of net income (loss) and net cash provided by operating activities to EBITDA and adjusted EBITDA for the second quarter and first two quarters of 2024 and 2023 along with the components of EBITDA and adjusted EBITDA follows (in thousands):

Current wording

Reconciliations of net income (loss) and net cash provided by operating activities to EBITDA and adjusted EBITDA for the third quarter and first three quarters of 2024 and 2023 along with the components of EBITDA and adjusted EBITDA follows (in thousands):

Previous wording

Adjusted Net Incomeand*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 (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 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

Current wording

Adjusted Net Incomeand*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 (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 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.

Previous wording

A reconciliation of net income (loss) to adjusted net income and adjusted diluted earnings per share for the second quarter and first two quarters of 2024 and 2023 along with the components of adjusted net income and adjusted diluted earnings per share follows (in thousands):

Current wording

A reconciliation of net income (loss) to adjusted net income and adjusted diluted earnings per share for the third quarter and first three quarters of 2024 and 2023 along with the components of adjusted net income and adjusted diluted earnings per share follows (in thousands):

Previous wording

included in cost of goods sold and adjusted gross profit percentage as gross profit percentage (i.e., gross profit as a percentage of net sales) adjusted for acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold. These non-GAAP financial measures reflect adjustments to gross profit and gross profit percentage 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 performance or when making decisions regarding allocation of resources.

Current wording

Adjusted Gross Profit and Adjusted Gross Profit Percentage.* *Adjusted gross profit and adjusted gross profit percentage are non-GAAP financial measures used by management to measure operating performance. We define adjusted gross profit as gross profit adjusted for acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold and adjusted gross profit percentage as gross profit percentage (i.e., gross profit as a percentage of net sales) adjusted for acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold. These non-GAAP financial measures reflect adjustments to gross profit and gross profit percentage 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 performance or when making decisions regarding allocation of resources.

Previous wording

A reconciliation of gross profit to adjusted gross profit and gross profit percentage to adjusted gross profit percentage for the second quarter and first two quarters of 2024 and 2023, respectively, follows (in thousands, except percentages):

Current wording

A reconciliation of gross profit to adjusted gross profit and gross profit percentage to adjusted gross profit percentage for the third quarter and first three quarters of 2024 and 2023, respectively, follows (in thousands, except percentages):

Previous wording

Net Sales.Net sales for the second quarter of 2024 decreased $25.0 million, or 5.3%, to $444.6 million from $469.6 million for the second quarter of 2023. The decrease was primarily attributable to theGreen Giant U.S. shelf-stable divestiture, a decrease in unit volume, a decrease in net pricing and the impact of product mix. Net sales of theGreen Giant U.S. shelf-stable product line, which we divested on November 8, 2023, were $13.7 million in the second quarter of 2023.

Current wording

Net Sales.Net sales for the third quarter of 2024 decreased $41.6 million, or 8.3%, to $461.1 million from $502.7 million for the third quarter of 2023. The decrease was primarily attributable to theGreen Giant U.S. shelf-stable divestiture, a decrease in unit volume, and the negative impact of foreign currency, partially offset by an increase in net pricing and the impact of product mix. Net sales of theGreen Giant U.S. shelf-stable product line, which we divested on November 8, 2023, were $20.3 million in the third quarter of 2023.

Previous wording

Base business net sales for the second quarter of 2024 decreased $11.3 million, or 2.5%, to $444.6 million from $455.9 million for the second quarter of 2023. The decrease in base business net sales was driven by a decrease in unit volume of $9.3 million, or 2.0% of base business net sales, a decrease in net pricing and the impact of product mix of $1.8 million, or 0.4%, and the negative impact of foreign currency of $0.2 million.

Current wording

Base business net sales for the third quarter of 2024 decreased $21.3 million, or 4.4%, to $461.1 million from $482.4 million for the third quarter of 2023. The decrease in base business net sales was driven by a decrease in unit volume of $22.6 million, or 4.7% of base business net sales, and the negative impact of foreign currency of $0.4 million, partially offset by an increase in net pricing and the impact of product mix of $1.7 million, or 0.4%.

Previous wording

*Gross Profit.*Gross profit was $92.0 million for the second quarter of 2024, or 20.7% of net sales. Adjusted gross profit, which excludes the negative impact of $1.2 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the second quarter of 2024, was $93.2 million, or 21.0% of net sales. Gross profit was $102.3 million for the second quarter of 2023, or 21.8% of net sales. Adjusted gross profit, which excludes the negative impact of $0.4 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the second quarter of 2023, was $102.7 million, or 21.9% of net sales.

Current wording

*Gross Profit.*Gross profit was $102.3 million for the third quarter of 2024, or 22.2% of net sales. Adjusted gross profit, which excludes the negative impact of $0.1 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the third quarter of 2024, was $102.4 million, or 22.2% of net sales. Gross profit was $113.8 million for the third quarter of 2023, or 22.6% of net sales. Adjusted gross profit, which excludes the negative impact of $0.3 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the third quarter of 2023, was $114.1 million, or 22.7% of net sales.

Previous wording

*Selling, General and Administrative Expenses.*Selling, general and administrative expenses decreased $4.8 million, or 9.9%, to $43.1 million for the second quarter of 2024 from $47.9 million for the second quarter of 2023. The decrease was composed of decreases in consumer marketing expenses of $3.4 million, selling expenses of $1.9 million, and warehousing expenses of $0.1 million, partially offset by an increase in general and administrative expenses of $0.6 million. Expressed as a percentage of net sales, selling, general and administrative expenses improved by 0.5 percentage points to 9.7% for the second quarter of 2024, as compared to 10.2% for the second quarter of 2023.

Current wording

*Selling, General and Administrative Expenses.*Selling, general and administrative expenses decreased $2.2 million, or 4.6%, to $46.0 million for the third quarter of 2024 from $48.2 million for the third quarter of 2023. The decrease was composed of decreases in consumer marketing expenses of $1.2 million, warehousing expenses of $0.9 million, selling expenses of $0.8 million, and acquisition/divestiture-related and non-recurring expenses of $0.6 million, partially offset by an increase in general and administrative expenses of $1.3 million. Expressed as a percentage of net sales, selling, general and administrative expenses increased by 0.4 percentage points to 10.0% for the third quarter of 2024, as compared to 9.6% for the third quarter of 2023.

Previous wording

*Amortization Expense.*Amortization expense decreased $0.1 million, or 1.9%, to $5.1 million for the second quarter of 2024 from $5.2 million for the second quarter of 2023.

Current wording

*Amortization Expense.*Amortization expense decreased $0.1 million, or 1.7%, to $5.1 million for the third quarter of 2024 from $5.2 million for the third quarter of 2023.

Previous wording

*Operating Income.*As a result of the foregoing, operating income decreased $5.4 million, or 11.0%, to $43.8 million for the second quarter of 2024 from $49.2 million for the second quarter of 2023. Operating income expressed as a percentage of net sales decreased to 9.9% in the second quarter of 2024 from 10.5% in the second quarter of 2023.

Current wording

*Operating Income (Loss).*As a result of the foregoing, operating income increased $123.7 million, or 170.7%, to an operating income of $51.2 million for the third quarter of 2024 from an operating loss of $72.5 million for the third quarter of 2023. Operating income (loss) expressed as a percentage of net sales decreased to 11.1% in the third quarter of 2024 from 14.4% in the third quarter of 2023.

Previous wording

*Net Interest Expense.*Net interest expense increased $2.0 million, or 5.6%, to $37.8 million for the second quarter of 2024 from $35.8 million for the second quarter of 2023. The increase was primarily attributable to higher interest rates on our variable rate borrowings during the second quarter of 2024 compared to the second quarter of 2023, as well as the accelerated amortization of deferred debt financing costs of $0.5 million resulting from our 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, partially offset by a reduction in average long-term debt outstanding during the second quarter of 2024 as compared to the second quarter of 2023 and the accelerated amortization of deferred debt financing costs relating to long-term debt prepayments during the second quarter of 2023. See “—Liquidity and Capital Resources —Debt” below.

Current wording

*Net Interest Expense.*Net interest expense increased $6.3 million, or 17.6%, to $42.2 million for the third quarter of 2024 from $35.9 million for the third quarter of 2023. The increase was primarily attributable to higher interest rates on our variable rate borrowings during the third quarter of 2024 compared to the third quarter of 2023, partially offset by a reduction in average long-term debt outstanding during the third quarter of 2024 as compared to the third quarter of 2023. Net interest expense during the third quarter of 2024 was also negatively impacted by a non-cash loss on extinguishment of debt of $1.9 million and debt refinancing costs of $1.1 million related to the refinancing of our senior secured credit facility. In addition, net interest expense for the third quarter of 2023 was reduced by $0.6 million as a result of a non-cash gain on extinguishment of debt, net of the accelerated amortization of deferred debt financing costs, related to the repurchase of a portion of our 5.25% senior notes due 2025. See “—Liquidity and Capital Resources —Debt” below.

Previous wording

Other Income. Other income for the second quarter of 2024 and 2023 includes the non-service portion of net periodic pension cost and net periodic post-retirement benefit costs of $1.0 million and $0.9 million, respectively.

Current wording

Other Income. Other income for the third quarter of 2024 and 2023 includes the non-service portion of net periodic pension cost and net periodic post-retirement benefit costs of $1.0 million and $1.0 million, respectively.

Previous wording

*Income Tax Expense.*Income tax expense decreased $0.7 million to $3.1 million for the second quarter of 2024 from $3.8 million for the second quarter of 2023. Our effective tax rate was 44.0% for the second quarter of 2024 and 26.3% for the second quarter of 2023. See “U.S. Tax Act” above for a discussion of the impact of the tax legislation on income tax expense.

Current wording

*Income Tax Expense (Benefit).*Income tax expense increased $27.4 million to an income tax expense of $2.7 million for the third quarter of 2024 from an income tax benefit of $24.7 million for the third quarter of 2023. Our effective tax rate was 26.3% for the third quarter of 2024 and 23.0% for the third quarter of 2023. See “U.S. Tax Act” above for a discussion of the impact of the tax legislation on income tax expense.

Previous wording

Net Sales.Net sales for the first two quarters of 2024 decreased $61.7 million, or 6.3%, to $919.8 million from $981.5 million for the first two quarters of 2023. The decrease was primarily attributable to theGreen Giant U.S. shelf-stable divestiture, a decrease in unit volume, and a decrease in net pricing and the impact of product mix. Net sales of theGreen GiantU.S. shelf-stable product line, which we divested on November 8, 2023, were $28.2 million in the first two quarters of 2023.

Current wording

Net Sales.Net sales for the first three quarters of 2024 decreased $103.3 million, or 7.0%, to $1,380.9 million from $1,484.2 million for the first three quarters of 2023. The decrease was primarily attributable to theGreen Giant U.S. shelf-stable divestiture, a decrease in unit volume, a decrease in net pricing and the impact of product mix, and the negative impact of foreign currency. Net sales of theGreen GiantU.S. shelf-stable product line, which we divested on November 8, 2023, were $48.6 million in the first three quarters of 2023.

Previous wording

Base business net sales for the first two quarters of 2024 decreased $33.3 million, or 3.5%, to $919.9 million from $953.2 million for the first two quarters of 2023. The decrease in base business net sales was driven by a decrease in net pricing and the impact of product mix of $17.2 million, or 1.8% of base business net sales and a decrease in unit volume of $16.1 million, or 1.7%.

Current wording

Base business net sales for the first three quarters of 2024 decreased $54.7 million, or 3.8%, to $1,381.0 million from $1,435.7 million for the first three quarters of 2023. The decrease in base business net sales was driven by a decrease in unit volume of $38.7 million, or 2.7%, a decrease in net pricing and the impact of product mix of $15.5 million, or 1.1% of base business net sales, and the negative impact of foreign currency of $0.5 million.

Previous wording

*Gross Profit.*Gross profit was $200.9 million for the first two quarters of 2024, or 21.8% of net sales. Adjusted gross profit, which excludes the negative impact of $2.2 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the first two quarters of 2024, was $203.1 million, or 22.1% of net sales. Gross profit was $216.5 million for the first two quarters of 2023, or 22.1% of net sales. Adjusted gross profit, which excludes the negative impact of $1.1 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the first two quarters of 2023, was $217.6 million, or 22.2% of net sales.

Current wording

*Gross Profit.*Gross profit was $303.3 million for the first three quarters of 2024, or 22.0% of net sales. Adjusted gross profit, which excludes the negative impact of $2.3 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the first three quarters of 2024, was $305.6 million, or 22.1% of net sales. Gross profit was $330.4 million for the first three quarters of 2023, or 22.3% of net sales. Adjusted gross profit, which excludes the negative impact of $1.4 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the first three quarters of 2023, was $331.8 million, or 22.3% of net sales.

Previous wording

*Selling, General and Administrative Expenses.*Selling, general and administrative expenses decreased $2.9 million, or 3.0%, to $91.7 million for the first two quarters of 2024 from $94.6 million for the first two quarters of 2023. The decrease was composed of decreases in selling expenses of $3.0 million, consumer marketing expenses of $1.8 million, and warehousing expenses of $0.7 million, partially offset by increases in general and administrative expenses of $2.5 million and acquisition/divestiture-related and non-recurring expenses of $0.1 million. Expressed as a percentage of net sales, selling, general and administrative expenses increased by 0.4 percentage points to 10.0% for the first two quarters of 2024, as compared to 9.6% for the first two quarters of 2023.

Current wording

*Selling, General and Administrative Expenses.*Selling, general and administrative expenses decreased $5.1 million, or 3.6%, to $137.7 million for the first three quarters of 2024 from $142.8 million for the first three quarters of 2023. The decrease was composed of decreases in selling expenses of $3.8 million, consumer marketing expenses of $3.0 million, warehousing expenses of $1.6 million, and acquisition/divestiture-related and non-recurring expenses of $0.6 million, partially offset by an increase in general and administrative expenses of $3.9 million. Expressed as a percentage of net sales, selling, general and administrative expenses increased by 0.4 percentage points to 10.0% for the first three quarters of 2024, as compared to 9.6% for the first three quarters of 2023.

Previous wording

*Amortization Expense.*Amortization expense decreased $0.3 million, or 2.2%, to $10.2 million for the first two quarters of 2024 from $10.5 million for the first two quarters of 2023.

Current wording

*Amortization Expense.*Amortization expense decreased $0.3 million, or 2.0%, to $15.3 million for the first three quarters of 2024 from $15.6 million for the first three quarters of 2023.

Previous wording

Impairment of Goodwill. In connection with our transition from one reporting segment to four reporting segments during the first quarter of 2024, we reassigned assets and liabilities, including goodwill, between the reporting segments and completed a goodwill impairment test both prior to and subsequent to the change. The goodwill impairment test resulted in us recognizing pre-tax, non-cash goodwill impairment charges of $70.6 million within our

Current wording

Impairment of Goodwill. In connection with our transition from one reporting segment to four reporting segments during the first quarter of 2024, we reassigned assets and liabilities, including goodwill, between the reporting segments and completed a goodwill impairment test both prior to and subsequent to the change. The goodwill impairment test resulted in us recognizing pre-tax, non-cash goodwill impairment charges of $70.6 million within our Frozen & Vegetables reporting segment during the first quarter of 2024. See Note 5, “Goodwill and Other Intangible Assets,” and Note 16, “Business Segment Information,” to our unaudited consolidated interim financial statements in Part I, Item I of this report.

Previous wording

*Operating Income.*As a result of the foregoing, operating income decreased $83.2 million, or 74.6%, to an operating income of $28.2 million for the first two quarters of 2024 from operating income of $111.4 million for the first two quarters of 2023. Operating income expressed as a percentage of net sales decreased to 3.1% in the first two quarters of 2024 from 11.3% in the first two quarters of 2023.

Current wording

*Operating Income.*As a result of the foregoing, operating income increased $40.6 million, or 104.5%, to $79.5 million for the first three quarters of 2024 from $38.9 million for the first three quarters of 2023. Operating income expressed as a percentage of net sales increased to 5.8% in the first three quarters of 2024 from 2.6% in the first three quarters of 2023.

Previous wording

Net Interest Expense. Net interest expense increased $0.4 million, or 0.5%, to $75.6 million for the first two quarters of 2024 from $75.2 million for the first two quarters of 2023. The increase was primarily attributable to higher interest rates on our long-term debt during the first two quarters of 2024 compared to the first two quarters of 2023, as well as the accelerated amortization of deferred debt financing costs of $0.5 million resulting from our 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, partially offset by a reduction in average long-term debt outstanding during the first two quarters of 2024 compared to the first two quarters of 2023 and the accelerated amortization of deferred debt financing costs relating to long-term debt prepayments during the first two quarters of 2023. See “—Liquidity and Capital Resources —Debt” below.

Current wording

Net Interest Expense. Net interest expense increased $6.7 million, or 6.0%, to $117.8 million for the first three quarters of 2024 from $111.1 million for the first three quarters of 2023. The increase was primarily attributable to higher interest rates on our variable rate borrowings during the first three quarters of 2024 compared to the first three quarters of 2023, partially offset by a reduction in average long-term debt outstanding during the first three quarters of 2024 compared to the first three quarters of 2023. Net interest expense during the first three quarters of 2024 was also negatively impacted by a non-cash loss on extinguishment of debt of $1.9 million and debt refinancing costs of $1.1 million related to the refinancing of our senior secured credit facility, and the accelerated amortization of deferred debt financing costs of $0.5 million resulting from the retirement of long-term debt during the first three quarters of 2024. In addition, net interest expense for the first three quarters of 2023 was reduced by $1.4 million as a result of non-cash gains on extinguishment of debt, net of the accelerated amortization of deferred debt financing costs, related to the repurchase of a portion of our 5.25% senior notes due 2025. See “—Liquidity and Capital Resources —Debt” below.

Previous wording

Other Income. Other income for the first two quarters of 2024 and 2023 includes the non-service portion of net periodic pension cost and net periodic post-retirement benefit costs of $2.1 million and $1.9 million, respectively.

Current wording

Other Income. Other income for the first three quarters of 2024 and 2023 includes the non-service portion of net periodic pension cost and net periodic post-retirement benefit costs of $3.1 million and $2.8 million, respectively.

Previous wording

Income Tax Expense (Benefit).Income tax expense decreased $33.0 million to a tax benefit of $9.0 million for the first two quarters of 2024 from a tax expense of $24.0 million for the first two quarters of 2023. In connection with our transition from one reporting segment to four reporting segments during the first quarter of 2024, we reassigned assets and liabilities, including goodwill, between the reporting segments and completed a goodwill impairment test both prior to and subsequent to the change. The goodwill impairment test resulted in us recognizing pre-tax, non-cash goodwill impairment charges of $70.6 million (or $53.4 million, net of tax) within our Frozen & Vegetables reporting segment during the first quarter of 2024. As a result of these goodwill impairment charges, we recorded a deferred tax benefit of $17.2 million during the first quarter of 2024. See Note 5, “Goodwill and Other Intangible Assets,” and Note 16, “Business Segment Information,” to our unaudited consolidated interim financial statements in Part I, Item I of this report. As a result of theBack to Naturedivestiture, we incurred a capital loss for tax purposes, for which we recorded a deferred tax asset during the first quarter of 2023. A valuation allowance has been recorded against this deferred tax asset, which negatively impacted our first quarter of 2023 income taxes by $14.7 million, or $0.21 per share. Our effective tax rate was 19.9% for the first two quarters of 2024 and 63.2% for the first two quarters of 2023. See “U.S. Tax Act” above for a discussion of the impact of the tax legislation on income tax expense (benefit).

Current wording

Income Tax Benefit.Income tax benefit increased $5.7 million to $6.3 million for the first three quarters of 2024 from $0.6 million for the first three quarters of 2023. In connection with our transition from one reporting segment to four reporting segments during the first quarter of 2024, we reassigned assets and liabilities, including goodwill, between the reporting segments and completed a goodwill impairment test both prior to and subsequent to the change. The goodwill impairment test resulted in us recognizing pre-tax, non-cash goodwill impairment charges of $70.6 million (or $53.4 million, net of tax) within our Frozen & Vegetables reporting segment during the first quarter of 2024. As a result of these goodwill impairment charges, we recorded a deferred tax benefit of $17.2 million during the first quarter of 2024. See Note 5, “Goodwill and Other Intangible Assets,” and Note 16, “Business Segment Information,” to our unaudited consolidated interim financial statements in Part I, Item I of this report. As a result of theBack to Naturedivestiture, we incurred a capital loss for tax purposes, for which we recorded a deferred tax asset during the first quarter of 2023. A valuation allowance has been recorded against this deferred tax asset, which negatively impacted our first quarter of 2023 income taxes by $14.7 million, or $0.21 per share. Our effective tax rate was 18.0% for the first three quarters of 2024 and 0.9% for the first three quarters of 2023. See “U.S. Tax Act” above for a discussion of the impact of the tax legislation on income tax expense (benefit).

Previous wording

Specialty portfolio in the aggregate, partially offset by an increase inCrisco volumes. For the first two quarters of 2024, the decrease in Specialty segment net sales was primarily due to a decrease in volumes forCrisco pricing driven by a decrease in commodity costs coupled with a decrease in volumes forCrisco and a decrease in volumes for the rest of the Specialty portfolio in the aggregate. The decrease in Specialty segment adjusted EBITDA for the second quarter and first two quarters of 2024, was primarily due to lower volumes, partially offset by rate improvements across key materials and freight costs.

Current wording

For the third quarter and first three quarters of 2024, the decrease in Specialty segment net sales was primarily due to lowerCrisco pricing, driven by decreased commodity costs, coupled with modest declines in volumes across the business unit in the aggregate. The decrease in Specialty segment adjusted EBITDA for the third quarter and first three quarters of 2024 was primarily due to lower volumes, partially offset by decreased costs in certain raw materials and improvements in freight costs.

Previous wording

For the second quarter and first two quarters of 2024, the decrease in Meals segment net sales was primarily due to a decrease in volumes across the Meals portfolio in the aggregate, partially offset by an increase in net pricing. The increase in Meals segment adjusted EBITDA was primarily due to improvements in freight costs, partially offset by a decrease in net sales, and rate increases in other key materials.

Current wording

For the third quarter and first three quarters of 2024, the decrease in Meals segment net sales was primarily due to a decrease in volumes across the Meals portfolio in the aggregate, partially offset by an increase in net pricing and

Previous wording

For the second quarter and first two quarters of 2024, the decrease in Frozen & Vegetables segment net sales was primarily due to theGreen Giant U.S. shelf-stable divestiture (which negatively impacted net sales versus the prior year period by $13.8 million and $28.3 million, respectively,), a decrease in volumes, increased promotional trade spending, and the impact of product mix in frozen. The decrease in Frozen & Vegetables segment adjusted EBITDA was primarily due to theGreen Giant U.S. shelf-stable divestiture, a decrease in net sales, increases in material costs and the negative impact of foreign currency, partially offset by improvements in freight costs.

Current wording

For the third quarter and first three quarters of 2024, the decrease in Frozen & Vegetables segment net sales was primarily due to theGreen Giant U.S. shelf-stable divestiture (which negatively impacted net sales versus the prior year period by $20.3 million and $48.7 million, respectively) and a decrease in volumes. The decrease in Frozen & Vegetables segment adjusted EBITDA was primarily due to the negative impact of foreign currency onGreen Giant raw material and manufacturing costs, theGreen Giant U.S. shelf-stable divestiture, and a decrease in net sales, partially offset by improvements in freight costs.

Previous wording

For the second quarter of 2024, the increase in Spices & Flavor Solutions segment net sales was primarily due to increased volumes across the Spices & Flavor Solutions portfolio in the aggregate. The increase in Spices & Flavor Solutions segment adjusted EBITDA was primarily due to an increase in net sales and improvements in freight costs, partially offset by increases in material costs. For the first two quarters of 2024, Spices & Flavor Solutions segment net sales and segment adjusted EBITDA were essentially flat.

Current wording

For the third quarter and first three quarters of 2024, the increase in Spices & Flavor Solutions segment net sales was primarily due to increased volumes across the Spices & Flavor Solutions portfolio in the aggregate. The decrease in Spices & Flavor Solutions segment adjusted EBITDA was primarily due to increases in trade spending and raw material costs, and product mix, partially offset by an increase in net sales and improvements in freight costs.