UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification Number) | |||
organization) | ||||
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (
NONE | ||||
(Former name or former address, if changed since last report.) | ||||
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated Filer ◻ | Non-Accelerated Filer ◻ | Smaller Reporting Company | |
Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with a new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by checkmark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Class |
| Outstanding as of March 30, 2024 | ||
Common stock, $1 par value |
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of Each Class | Trading Symbol | Name of Each Exchange On Which Registered |
TABLE OF CONTENTS
PART I. | FINANCIAL INFORMATION. | Page No. | |
Item 1. | Financial Statements | 3 | |
Condensed Consolidated Balance Sheets at March 30, 2024, December 30, 2023 and April 1, 2023 | 3 | ||
4 | |||
5 | |||
6 | |||
Notes to Unaudited Condensed Consolidated Financial Statements | 7 | ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18 | ||
32 | |||
33 | |||
PART II. | OTHER INFORMATION | ||
Item 1. | Legal Proceedings – NONE | ||
33 | |||
33 | |||
Item 3. | Defaults upon Senior Securities – NONE | ||
Item 4. | Mine Safety Disclosures – NONE | ||
33 | |||
34 |
2
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share data) | March 30, | December 30, | April 1, | |||||||
| 2024 |
| 2023 |
| 2023 | |||||
ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents | $ | |
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Restricted cash |
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Investments |
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Accounts receivable, net |
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Inventories: |
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Raw materials |
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Finished goods |
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Total inventories |
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Refundable income taxes |
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Other current assets |
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TOTAL CURRENT ASSETS |
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DEFERRED INCOME TAXES |
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RESTRICTED INVESTMENTS |
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RIGHT OF USE ASSETS | | |||||||||
OTHER ASSETS |
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GOODWILL |
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INDEFINITE-LIVED INTANGIBLE ASSETS |
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OTHER INTANGIBLE ASSETS, NET |
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PROPERTY, PLANT AND EQUIPMENT: |
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Property, plant and equipment | | | | |||||||
Less accumulated depreciation and amortization |
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PROPERTY, PLANT AND EQUIPMENT, NET | | | ||||||||
TOTAL ASSETS | | | | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable | $ | | $ | |
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Accrued liabilities: |
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Compensation and benefits |
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Income taxes | — | — | | |||||||
Other |
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Current portion of lease liability | | | | |||||||
Current portion of long-term debt |
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TOTAL CURRENT LIABILITIES |
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LONG-TERM DEBT |
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LEASE LIABILITY | | | | |||||||
DEFERRED INCOME TAXES |
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OTHER LIABILITIES |
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TOTAL LIABILITIES |
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TEMPORARY EQUITY: | ||||||||||
Redeemable noncontrolling interest | $ | | $ | | $ | | ||||
SHAREHOLDERS’ EQUITY: |
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Controlling interest shareholders’ equity: |
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Preferred stock, | $ | $ |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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Total controlling interest shareholders’ equity |
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Noncontrolling interest |
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TOTAL SHAREHOLDERS’ EQUITY |
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TOTAL LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS’ EQUITY | $ | | $ | |
| $ | |
See notes to consolidated condensed financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE INCOME
(Unaudited)
(in thousands, except per share data) | Three Months Ended | |||||
March 30, | April 1, | |||||
2024 |
| 2023 |
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NET SALES | $ | |
| $ | |
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COST OF GOODS SOLD |
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GROSS PROFIT |
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
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OTHER LOSSES (GAINS), NET | | | ||||
EARNINGS FROM OPERATIONS |
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INTEREST EXPENSE |
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INTEREST AND INVESTMENT INCOME |
| ( |
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EQUITY IN LOSS OF INVESTEE | | | ||||
INTEREST AND OTHER |
| ( |
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EARNINGS BEFORE INCOME TAXES |
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INCOME TAXES |
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NET EARNINGS |
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NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST |
| ( |
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NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST | $ | | $ | | ||
EARNINGS PER SHARE – BASIC | $ | | $ | | ||
EARNINGS PER SHARE – DILUTED | $ | | $ | | ||
OTHER COMPREHENSIVE INCOME: | ||||||
NET EARNINGS |
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OTHER COMPREHENSIVE INCOME (LOSS) |
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COMPREHENSIVE INCOME |
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COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST |
| ( |
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COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST | $ | | $ | |
See notes to consolidated condensed financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
(in thousands, except share and per share data) | Controlling Interest Shareholders’ Equity | ||||||||||||||||||||
Additional | Accumulated Other | ||||||||||||||||||||
Common | Paid-In | Retained | Comprehensive | Noncontrolling | Temporary | ||||||||||||||||
| Stock |
| Capital |
| Earnings |
| Earnings |
| Interest (NCI) |
| Total |
| Equity | ||||||||
Balance on December 30, 2023 | $ | | $ | |
| $ | | $ | |
| $ | |
| $ | | $ | | ||||
Net earnings (loss) | | | |
| ( | ||||||||||||||||
Foreign currency translation adjustment | ( | | ( |
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Unrealized loss on debt securities | | — | |
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Distributions to NCI | ( | ( |
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Cash dividends - $ | ( | ( |
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Issuance of |
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Issuance of |
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Issuance of |
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Repurchase of |
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Expense associated with share-based compensation arrangements | | |
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Accrued expense under deferred compensation plans | | |
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Balance on March 30, 2024 | $ | | $ | | $ | | $ | ( | $ | | $ | | $ | |
(in thousands, except share and per share data) | Controlling Interest Shareholders’ Equity | ||||||||||||||||||||
Additional | Accumulated Other | ||||||||||||||||||||
Common | Paid-In | Retained | Comprehensive | Noncontrolling | Temporary | ||||||||||||||||
| Stock |
| Capital |
| Earnings |
| Earnings |
| Interest (NCI) |
| Total |
| Equity | ||||||||
Balance on December 31, 2022 | $ | | $ | | $ | | $ | ( | $ | |
| $ | | $ | | ||||||
Net earnings (loss) | | ( |
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Foreign currency translation adjustment | | |
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Unrealized loss on debt securities | |
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Distributions to NCI | ( |
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Other |
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Cash dividends - $ | ( |
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Issuance of |
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Issuance of |
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Issuance of |
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Repurchase of |
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Expense associated with share-based compensation arrangements | | | |||||||||||||||||||
Accrued expense under deferred compensation plans | |
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Balance on April 1, 2023 | $ | | $ | |
| $ | | $ | ( |
| $ | |
| $ | | $ | |
See notes to consolidated condensed financial statements.
5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands) | Three Months Ended | |||||
March 30, | April 1, | |||||
| 2024 |
| 2023 | |||
CASH FLOWS USED IN OPERATING ACTIVITIES: |
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Net earnings | $ | |
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Adjustments to reconcile net earnings to net cash used in operating activities: |
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Depreciation |
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Amortization of intangibles |
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Expense associated with share-based and grant compensation arrangements |
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Deferred income taxes |
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Unrealized gain on investments and other |
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Equity in loss of investee | | | ||||
Net gain on sale and disposition of assets |
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Changes in: |
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Accounts receivable |
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Inventories |
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Accounts payable and cash overdraft |
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Accrued liabilities and other |
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NET CASH USED IN OPERATING ACTIVITIES |
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CASH FLOWS USED IN INVESTING ACTIVITIES: |
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Purchases of property, plant and equipment |
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Proceeds from sale of property, plant and equipment |
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Purchases of investments |
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Proceeds from sale of investments |
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Other |
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NET CASH USED IN INVESTING ACTIVITIES |
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CASH FLOWS USED IN FINANCING ACTIVITIES: |
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Borrowings under revolving credit facilities |
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Repayments under revolving credit facilities |
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Repayments of debt | — | ( | ||||
Repayment of debt on behalf of investee | ( | — | ||||
Contingent consideration payments and other | ( | ( | ||||
Proceeds from issuance of common stock |
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Dividends paid to shareholders |
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Distributions to noncontrolling interest | ( | ( | ||||
Payments to taxing authorities in connection with shares directly withheld from employees | ( | — | ||||
Repurchase of common stock |
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Other |
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NET CASH USED IN FINANCING ACTIVITIES |
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Effect of exchange rate changes on cash |
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NET CHANGE IN CASH AND CASH EQUIVALENTS |
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CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR |
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CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD | $ | | $ | | ||
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH: | ||||||
Cash and cash equivalents, beginning of period | $ | | $ | | ||
Restricted cash, beginning of period | | | ||||
Cash, cash equivalents, and restricted cash, beginning of period | $ | | $ | | ||
Cash and cash equivalents, end of period | $ | | $ | | ||
Restricted cash, end of period | | | ||||
Cash, cash equivalents, and restricted cash, end of period | $ | | $ | | ||
SUPPLEMENTAL INFORMATION: |
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Interest paid | $ | | $ | | ||
Income taxes paid |
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NON-CASH INVESTING ACTIVITIES |
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Capital expenditures included in accounts payable |
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NON-CASH FINANCING ACTIVITIES: | ||||||
Common stock issued under deferred compensation plans | $ | | $ | |
See notes to consolidated condensed financial statements.
6
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A. BASIS OF PRESENTATION
The accompanying unaudited interim consolidated condensed financial statements (the “Financial Statements”) include our accounts and those of our wholly-owned and majority-owned subsidiaries and partnerships, and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, the Financial Statements do not include all the information and footnotes normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America. All significant intercompany balances and transactions have been eliminated in consolidation.
We consolidate entities in which we have a controlling financial interest. In determining whether we have a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity (“VIE”) and whether we are the primary beneficiary. The primary beneficiary of a VIE is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. The primary beneficiary is required to consolidate the VIE. We account for unconsolidated VIEs using the equity method of accounting.
As a result of the investment in Dempsey on June 27, 2022, we own
In our opinion, the Financial Statements contain all material adjustments necessary to present fairly our consolidated financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. These Financial Statements should be read in conjunction with the annual consolidated financial statements, and footnotes thereto, included in our Annual Report to Shareholders on Form 10-K for the fiscal year ended December 30, 2023.
Seasonality has a significant impact on our working capital from March to August, which historically results in negative or modest cash flows from operations in our first and second quarters. Conversely, we experience a substantial decrease in working capital from September to February which typically results in significant cash flow from operations in our third and fourth quarters. For comparative purposes, we have included the April 1, 2023 balances in the accompanying unaudited condensed consolidated balance sheets.
7
In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," which is intended to enhance the transparency, decision usefulness and effectiveness of income tax disclosures. The amendments in this ASU require a public entity to disclose a tabular tax rate reconciliation, using both percentages and currency, with specific categories. A public entity is also required to provide a qualitative description of the states and local jurisdictions that make up the majority of the effect of the state and local income tax category and the net amount of income taxes paid, disaggregated by federal, state and foreign taxes and also disaggregated by individual jurisdictions. The amendments also remove certain disclosures that are no longer considered cost beneficial. The amendments are effective prospectively for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted. Although the ASU only modifies our required income tax disclosures, we are currently evaluating the impact of adopting this guidance on the consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment's profit or loss to assess potential future cash flows for each reportable segment and the entity as a whole. The amendments expand a public entity's segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), clarifying when an entity may report one or more additional measures to assess segment performance, requiring enhanced interim disclosures, providing new disclosure requirements for entities with a single reportable segment, and requiring other new disclosures. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted. Although the ASU only requires additional disclosures about the Company's operating segments, we are currently evaluating the impact of adopting this guidance on the consolidated financial statements.
8
B. FAIR VALUE
We apply the provisions of ASC 820, Fair Value Measurements and Disclosures, to assets and liabilities measured at fair value.
March 30, 2024 | December 30, 2023 | |||||||||||||||||||||||
Quoted | Prices with | Quoted | Prices with | |||||||||||||||||||||
Prices in | Other | Prices with | Prices in | Other | Prices with | |||||||||||||||||||
Active | Observable | Unobservable | Active | Observable | Unobservable | |||||||||||||||||||
Markets | Inputs | Inputs | Markets | Inputs | Inputs | |||||||||||||||||||
| (Level 1) |
| (Level 2) |
| (Level 3) | Total |
| (Level 1) |
| (Level 2) |
| (Level 3) |
| Total | ||||||||||
Money market funds | $ | | $ | | $ | — |
| $ | |
| $ | |
| $ | | $ | — |
| $ | | ||||
Fixed income funds |
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Treasury securities | | — | — | | | — | — | | ||||||||||||||||
Equity securities |
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Alternative investments | — | — | | | — | — | | | ||||||||||||||||
Mutual funds: |
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Domestic stock funds |
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International stock funds |
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| — | — |
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Target funds |
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Bond funds |
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| — | — |
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Alternative funds | | — | — | | | — | — | | ||||||||||||||||
Total mutual funds |
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| — | — |
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| — | — |
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Total | $ | | $ | | $ | |