Financial Performance - Total sales for the twelve weeks ended July 12, 2024, reached $49,263 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 $11,224 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, 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 $151,419 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 $37,988 million, down from $47,814 million in the previous year, a decline of about 20.6%[52] - Consolidated net sales decreased by $4,926 (9.1%) 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 (11.6%) to $151,419[92] - Net loss for the thirty-six weeks ended July 12, 2024, was $2,730, 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, 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 $1,343 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 $163,861 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 $7,500 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 $2,786 as of November 3, 2023[59] - Total debt as of July 12, 2024, was $3,143 million, down from $3,831 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, with lower wages and bonuses due to decreased sales volume[88] - Selling, general and administrative expenses decreased by $1,946 (4.3%) to $43,446 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, with a notable decrease in the Frozen Food Products segment by $139 (1.6%)[84][86] - Cost of products sold decreased by $10,076 (8.2%) 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] - 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 $820 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, 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, 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, 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 $112,598 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]
Bridgford Foods (BRID) - 2024 Q3 - Quarterly Report