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Bridgford Foods (BRID) - 2024 Q3 - Quarterly Report
BRIDBridgford Foods (BRID)2024-08-23 20:05

Financial Performance - Total sales for the twelve weeks ended July 12, 2024, reached 49,263million,adecreasefrom49,263 million, a decrease from 54,189 million in the same period last year, representing a decline of approximately 9.4%[46] - The gross margin for the twelve weeks ended July 12, 2024, was 11,224million,downfrom11,224 million, down from 15,291 million in the prior year, indicating a decrease of about 26.5%[46] - Operating loss for the twelve weeks ended July 12, 2024, was (3,384)million,comparedtoanoperatingincomeof(3,384) million, compared to an operating income of 597 million for the same period in 2023[46] - For the thirty-six weeks ended July 12, 2024, total sales were 151,419million,comparedto151,419 million, compared to 171,321 million for the same period in 2023, reflecting a decrease of approximately 11.6%[52] - The gross margin for the thirty-six weeks ended July 12, 2024, was 37,988million,downfrom37,988 million, down from 47,814 million in the previous year, a decline of about 20.6%[52] - Consolidated net sales decreased by 4,926(9.14,926 (9.1%) to 49,263 for the twelve weeks ended July 12, 2024, compared to the same period in 2023[81] - For the thirty-six weeks ended July 12, 2024, consolidated net sales decreased by 19,902(11.619,902 (11.6%) to 151,419[92] - Net loss for the thirty-six weeks ended July 12, 2024, was 2,730,comparedtoanetincomeof2,730, compared to a net income of 1,765 for the same period in fiscal year 2023[106] Inventory and Assets - As of July 12, 2024, total inventories amounted to 34,912,downfrom34,912, down from 40,573 as of November 3, 2023, indicating a decrease of 14.5%[33] - The net realizable value reserve for inventory increased to 1,343asofJuly12,2024,from1,343 as of July 12, 2024, from 513 as of November 3, 2023, showing a significant rise of 161.4%[33] - Total assets as of July 12, 2024, amounted to 163,861million,slightlydownfrom163,861 million, slightly down from 171,433 million as of July 7, 2023[46] Debt and Financing - The company entered into a revolving credit facility allowing borrowing up to 7,500ataninterestrateofthedailysimplesecuredovernightfinancingrateplus2.07,500 at an interest rate of the daily simple secured overnight financing rate plus 2.0%[56] - As of July 12, 2024, total long-term debt was 2,068, a decrease from 2,786asofNovember3,2023[59]−TotaldebtasofJuly12,2024,was2,786 as of November 3, 2023[59] - Total debt as of July 12, 2024, was 3,143 million, down from 3,831milliononNovember3,2023[113]−ThecompanywasincompliancewithallcovenantsundertheWellsFargoLoanAgreementsasofJuly12,2024[58]RevenueRecognitionandAccounting−TheCompany’srevenuerecognitionpolicyfollowsASCTopic606,recognizingrevenueuponthetransferofcontrolofproductstocustomers[24]−RevenuerecognitionfollowsASC606,withrevenuesrecognizeduponpassageoftitletothecustomer,typicallyatproductpick−up,shipment,ordelivery[75]−Thecompanyiscurrentlyevaluatingtheimpactofrecentlyissuedaccountingpronouncementsonitsfinancialstatements,includingASUNo.2023−07relatedtosegmentreporting[31]−Thecompanyiscurrentlyevaluatingtheimpactofnewaccountingpronouncementsandregulationsonitsfinancialstatements[115]CustomerandMarketRisks−Customerconcentrationshowedthatsignificantcustomersaccountedformorethan203,831 million on November 3, 2023[113] - The company was in compliance with all covenants under the Wells Fargo Loan Agreements as of July 12, 2024[58] Revenue Recognition and Accounting - The Company’s revenue recognition policy follows ASC Topic 606, recognizing revenue upon the transfer of control of products to customers[24] - Revenue recognition follows ASC 606, with revenues recognized upon passage of title to the customer, typically at product pick-up, shipment, or delivery[75] - The company is currently evaluating the impact of recently issued accounting pronouncements on its financial statements, including ASU No. 2023-07 related to segment reporting[31] - The company is currently evaluating the impact of new accounting pronouncements and regulations on its financial statements[115] Customer and Market Risks - Customer concentration showed that significant customers accounted for more than 20% of consolidated accounts receivable or 10% of consolidated sales for the thirty-six weeks ended July 12, 2024[74] - The company has significant receivables from a couple of large customers, which could pose material risk if their operations deteriorate[66] Operational Costs and Expenses - SG&A expenses decreased by 212 (1.4%) to 14,445,withlowerwagesandbonusesduetodecreasedsalesvolume[88]−Selling,generalandadministrativeexpensesdecreasedby14,445, with lower wages and bonuses due to decreased sales volume[88] - Selling, general and administrative expenses decreased by 1,946 (4.3%) to 43,446forthethirty−sixweeksendedJuly12,2024,comparedtothesameperiodinthepriorfiscalyear[100]−Costofproductssolddecreasedby43,446 for the thirty-six weeks ended July 12, 2024, compared to the same period in the prior fiscal year[100] - Cost of products sold decreased by 859 (2.2%) to 38,039,withanotabledecreaseintheFrozenFoodProductssegmentby38,039, with a notable decrease in the Frozen Food Products segment by 139 (1.6%)[84][86] - Cost of products sold decreased by 10,076(8.210,076 (8.2%) to 113,431 for the thirty-six weeks ended July 12, 2024, compared to the same period in fiscal year 2023[96] Tax and Legal Matters - The effective tax rate for the third quarter of fiscal year 2024 was 29.1%, down from 31.7% in the same quarter of fiscal year 2023, reflecting a tax benefit of 1,119[54]−Thecompanyrecordedabenefitforincometaxesof1,119[54] - The company recorded a benefit for income taxes of 1,119 for the thirty-six weeks ended July 12, 2024, compared to a provision for income taxes of 820forthesameperiodinfiscalyear2023[103]−Thecompanybelievesthatthefinaloutcomeofordinarylegalproceedingswillnothaveamaterialadverseeffectonitsbusinessorfinancialcondition[123]InternalControlsandRiskManagement−Thecompanydoesnotexpectthatitsdisclosurecontrolsandinternalcontrolswillpreventallerrorsandfraud,acknowledginginherentlimitations[119]−TherehavebeennochangesininternalcontrolsoverfinancialreportingthatmateriallyaffectedthecompanyduringthefiscalquarterendedJuly12,2024[122]−TheCompanyhasnotexperiencedanylossesincashaccountsexceedingtheFederalDepositInsuranceCorporationinsurancecoveragelimit,indicatingeffectivecreditriskmanagement[20]−TheCompanymaintainsanallowancefordoubtfulaccounts,whichisreviewedquarterlyforadequacy,reflectingproactivecreditmanagementpractices[20]SegmentPerformance−Thecompanyoperatestworeportablesegments:FrozenFoodProductsandSnackFoodProducts,withperformanceevaluatedbasedonrevenuesandoperatingincome[44]−NetsalesintheFrozenFoodProductssegmentincreasedby820 for the same period in fiscal year 2023[103] - The company believes that the final outcome of ordinary legal proceedings will not have a material adverse effect on its business or financial condition[123] Internal Controls and Risk Management - The company does not expect that its disclosure controls and internal controls will prevent all errors and fraud, acknowledging inherent limitations[119] - There have been no changes in internal controls over financial reporting that materially affected the company during the fiscal quarter ended July 12, 2024[122] - The Company has not experienced any losses in cash accounts exceeding the Federal Deposit Insurance Corporation insurance coverage limit, indicating effective credit risk management[20] - The Company maintains an allowance for doubtful accounts, which is reviewed quarterly for adequacy, reflecting proactive credit management practices[20] Segment Performance - The company operates two reportable segments: Frozen Food Products and Snack Food Products, with performance evaluated based on revenues and operating income[44] - Net sales in the Frozen Food Products segment increased by 665 (6.1%) to 11,517,drivenbyhighersellingpricesperpound[82]−NetsalesintheSnackFoodProductssegmentdecreasedby11,517, driven by higher selling prices per pound[82] - Net sales in the Snack Food Products segment decreased by 5,591 (12.9%) to 37,746,primarilyduetolowerunitsalesvolumeandsellingprices[83]−NetsalesintheFrozenFoodProductssegmentincreasedby37,746, primarily due to lower unit sales volume and selling prices[83] - Net sales in the Frozen Food Products segment increased by 1,665 (4.5%) to 38,821,attributedtohighersellingpricesandunitsalesvolume[93]−NetsalesintheSnackFoodProductssegmentdecreasedby38,821, attributed to higher selling prices and unit sales volume[93] - Net sales in the Snack Food Products segment decreased by 21,567 (16.1%) to 112,598forthethirty−sixweeksendedJuly12,2024,comparedtothesameperiodinfiscalyear2023[94]CashFlowandCycle−Netcashprovidedbyoperatingactivitieswas112,598 for the thirty-six weeks ended July 12, 2024, compared to the same period in fiscal year 2023[94] Cash Flow and Cycle - Net cash provided by operating activities was 3,202 for the thirty-six weeks ended July 12, 2024, a decrease of $3,107 compared to the same period in fiscal year 2023[106] - The cash conversion cycle was 85 days for the thirty-six weeks ended July 12, 2024, showing a minimal increase from 84 days in the prior fiscal year[107]