Bridgford Foods (BRID) - 2023 Q3 - Quarterly Report

Sales Performance - Net sales decreased by $5,330 (9.0%) to$ 54,189 in the third twelve-week period of the 2023 fiscal year compared to the same period in fiscal year 2022[32]. - Net sales decreased by $12,270 (6.7%) to$ 171,321 for the thirty-six weeks ended July 7, 2023, compared to the same period in fiscal year 2022[81]. - Net sales in the Snack Food Products segment decreased by $12,870 (8.8%) to$ 134,165 for the thirty-six weeks ended July 7, 2023[82]. - Net sales in the Frozen Food Products segment increased by $600 (1.6%) to$ 37,156 for the thirty-six weeks ended July 7, 2023[81]. - Total sales for the twelve weeks ended July 7, 2023, were $54,189 million, a decrease of 8.4% from$ 59,519 million in the same period in 2022[214]. - For the thirty-six weeks ended July 7, 2023, total sales were $171,321 million, compared to$ 183,591 million for the same period in 2022, reflecting a decline of 6.7%[214]. Financial Position - Total long-term debt as of July 7, 2023, was $3,139, down from$ 3,824 as of October 28, 2022[48]. - The total debt as of July 7, 2023, was $4,171 million, with total long-term debt amounting to$ 3,139 million[165]. - The company had $68,173 of net working capital as of July 7, 2023[119]. - The company maintains a revolving line of credit with Wells Fargo Bank, N.A., with a borrowing limit of up to$ 15,000 million[145]. - The company is in discussions to amend its line of credit with Wells Fargo Bank, decreasing it to $7,500 from$ 15,000, with an expiration date of August 31, 2024[85]. Income and Expenses - As of July 7, 2023, the company reported a net income of $1,765 compared to$ 42,410 for the same period in 2022, reflecting a significant decrease[119]. - The company recorded a provision for income taxes of $258 for the twelve-week period ended July 7, 2023, based on the expected annual effective tax rate[80]. - The effective tax rate for the third quarter of fiscal year 2023 was 31.7%, compared to 29.0% in the same quarter of fiscal year 2022, reflecting a tax expense of$ 820[89]. - The company recorded a tax provision of $820 for the thirty-six-week period ended July 7, 2023, based on the expected annual effective tax rate[115]. - Operating income significantly dropped to$ 2.2 million for the 36 weeks ended July 7, 2023, compared to $62.6 million for the same period in 2022, reflecting a decline of approximately 96.5%[195]. - Net income for the 36 weeks ended July 7, 2023, was$ 1.8 million, a substantial decrease from $42.4 million in the previous year, marking a decline of about 95.8%[195]. Cost of Goods Sold - Cost of products sold in the Frozen Food Products segment increased by$ 57 (0.7%) to $8,809 in the third twelve-week period of fiscal year 2023 compared to the same period in fiscal year 2022[97]. - Cost of products sold in the Snack Food Products segment decreased by$ 3,657 (10.8%) to $30,089 in the third twelve-week period of fiscal year 2023 compared to the same period in fiscal year 2022[98]. - Cost of products sold decreased by$ 9,988 (7.5%) to $123,507 in the thirty-six-week period ended July 7, 2023, compared to the same period in fiscal year 2022, with gross margin increasing from 27.3% to 27.9%[108]. - The cost of products sold in the Frozen Food Products segment increased by$ 2,780 (10.6%) to $29,032 in the first thirty-six-week period of fiscal year 2023 compared to the same period in fiscal year 2022[132]. - The cost of products sold in the Snack Food Products segment decreased by$ 12,768 (11.9%) to $94,475 in the first thirty-six-week period of fiscal year 2023 compared to the same period in fiscal year 2022[133]. Customer Concentration - Walmart accounted for 29.6% of consolidated sales and 27.4% of accounts receivable as of July 7, 2023, compared to 30.8% and 19.8% respectively as of July 8, 2022[26]. - Major customers included Walmart and Dollar General, with sales percentages of 27.8% and 17.9% respectively for the period ended July 7, 2023[201]. - Dollar General represented 16.8% of sales as of July 7, 2023, down from 18.2% in the prior year[219]. Operational Challenges - The business disruptions associated with the COVID-19 pandemic had a minimal impact on the company’s financial statements for the fiscal year ended October 28, 2022, and during the twelve and thirty-six weeks ended July 7, 2023[53]. - Management expects inflation trends, including higher costs for labor, freight, and specific materials, to continue through the remainder of fiscal year 2023[166]. - The company has implemented remediation steps to address a material weakness in internal control over financial reporting, which is expected to be resolved before the end of fiscal year 2023[154]. Market Strategy - The company plans to focus on market expansion and new product development to drive future growth[215]. - The company maintains a network of independent food service and retail brokers, which is considered a valuable asset for new product opportunities[29].