UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 10-K
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 1, 2024
Commission file number: 000-02396
BRIDGFORD FOODS CORPORATION
(Exact name of Registrant as specified in its charter)
1707
South Good-Latimer Expressway, Dallas,
Texas75226
(Address of principal executive offices)
(214)428-1535
(Registrant’s
telephone number, including area code)
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock BRID Nasdaq Global Market
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No☒
Indicate
by check mark 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. Yes☒
No ☐
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). Yes☒ No ☐
Indicate
by check mark 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:
Large accelerated filer ☐ 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 any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
No ☒
The
aggregate market value of voting and non-voting stock held by non-affiliates of the registrant on April 19, 2024, the last business day
of the registrant’s most recently completed second fiscal quarter, was approximately $18,589,000.
As of January 29, 2025, there
were 9,076,832 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY
REFERENCE
Portions of the registrant’s definitive
proxy statement on Schedule 14A relating to the registrant’s 2025 annual meeting of stockholders, to be filed with the Securities
and Exchange Commission within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, are incorporated
by reference in Part III, Items 10-14, within this Annual Report on Form 10-K.
INDEX TO FORM 10-K
Page
Cautionary Note Regarding Forward-Looking Statements 3
PART I 3
Item 1. Business 3
Item 1A. Risk Factors 6
Item 1B. Unresolved Staff Comments 9
Item 1C. Cybersecurity 9
Item 2. Properties 10
Item 3. Legal Proceedings 10
Item 4. Mine Safety Disclosures 10
Item 6. [Reserved] 11
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 17
Item 8. Financial Statements and Supplementary Data 17
Item 9A. Controls and Procedures 18
Item 9B. Other Information 19
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 19
PART III 20
Item 10. Directors, Executive Officers and Corporate Governance 20
Item 11. Executive Compensation 20
Item 14. Principal Accountant Fees and Services 20
Item 15. Exhibits and Financial Statement Schedules 20
SIGNATURES 22
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K (this “Report”)
contains “forward-looking statements” within the meaning of the federal securities laws, which statements are subject to considerable
risks and uncertainties. These forward-looking statements are intended to qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. All statements included or incorporated by reference in this Report, other than statements
of historical fact, are forward-looking statements. You can identify forward-looking statements by the use of words such as “anticipate,”
“believe,” “continue” “could,” “expect,” “intend,” “may,” “will,”
or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or
relating to such statements.
In particular, forward-looking statements included
or incorporated by reference in this Report relate to, among other things: general economic and business conditions; the impact of competitive
products and pricing; success of operating initiatives; development and operating costs; advertising and promotional efforts; adverse
publicity; acceptance of new product offerings; changes in business strategy or development plans; availability, terms and deployment
of capital; availability of qualified personnel; commodity, labor, and employee benefit costs; supply chain constraints and resulting
cost pressures; macroeconomic conditions, including the impact of inflation on our results of operations; changes in, or failure to comply
with, government regulations; weather conditions; relationships with customers and suppliers.
Our forward-looking statements are based on
our management’s current assumptions and expectations about future events and trends, which affect or may affect our business, strategy,
operations or financial performance. Although we believe that these forward-looking statements are based upon reasonable assumptions,
they are subject to numerous known and unknown risks and uncertainties and are made in light of information currently available to us.
Our actual financial condition and results could differ materially from those anticipated in these forward-looking statements as a result
of various factors, including those set forth in the section entitled Risk Factors beginning on page 6 of this Report. You should read
this Report with the understanding that our actual future results may be materially different from and worse than what we expect.
Moreover, we operate in an evolving environment.
New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and
uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements.
Forward-looking statements speak only as of
the date they were made, and, except to the extent required by law or the Nasdaq listing rules, we undertake no obligation to update or
review any forward-looking statement because of new information, future events or other factors.
We qualify all of our forward-looking statements
by these cautionary statements.
PART I
Item 1. Business
Background of Business
Bridgford Foods Corporation
(collectively with its subsidiaries, “Bridgford”, the “Company”, “we”, or “our”), a California
corporation, was organized in 1952. We originally began operations in 1932 as a retail meat market in San Diego, California and evolved
into a meat wholesaler for hotels and restaurants, a distributor of frozen food products, a processor and packer of meat, and a manufacturer
and distributor of frozen food products for sale on a retail and wholesale basis. Currently, we are primarily engaged in the manufacturing,
marketing, and distribution of an extensive line of frozen and snack food products throughout the United States. We have not been involved
in any bankruptcy, receivership, or similar proceedings since inception nor have we been party to any merger, acquisition, etc. or acquired
or disposed of any material amounts of assets during the past five years other than the sale of our real property located at 170 N. Green
Street in Chicago in June 2022. Substantially all of our assets have been acquired in the ordinary course of business.
Description of Business
Bridgford currently operates
in two business segments - the processing and distribution of frozen food products and the processing and distribution of snack food products.
For information regarding the separate financial performance of the business segments refer to Note 7 of the Notes to Consolidated Financial
Statements included in this Report.
The following table shows
sales, as a percentage of consolidated sales, for each business segment during the last two fiscal years:
Frozen Food Products 26 % 23 %
Snack Food Products 74 % 77 %
We manufacture nearly all
of our food products and distribute an extensive line of biscuits, bread dough items, roll dough items, dry sausage products and beef
jerky. Our direct store delivery network consists of non-refrigerated snack food products. Our frozen food products division serves both
food service and retail customers.
Although we have recently
introduced several new products, most of these products have not contributed significantly to our revenue growth for the fiscal year 2024.
Our sales are not subject to material seasonal variations. Historically we have been able to respond quickly to the receipt of orders
and, accordingly, do not maintain a significant sales backlog. Neither Bridgford nor its industry generally has unusual demands or restrictions
on working capital items. During the last fiscal year, we did not enter into any new markets or any significant contractual or other material
relationships.
Product Distribution Methods
Our products are delivered
to customers using several distinct distribution channels. The distribution channel utilized is dependent upon the needs of our customers,
the most efficient proximity to the delivery point, trade customs, and operating segment as well as product type, life, and stability.
Among our customers are many of the country’s largest broadline and specialty food service distributors. These and other large-end
purchasers occasionally go through extensive qualification procedures and our manufacturing capabilities are subjected to thorough review
by the end purchasers prior to our approval as a vendor. Large end purchasers typically select suppliers that can consistently meet increased
volume requirements on a national basis during peak promotional periods. We believe that our manufacturing flexibility, national presence,
and long-standing customer relationships should allow us to compete effectively with other manufacturers seeking to provide similar products
to our current large food service end purchasers, although no assurances can be given.
The factors that contribute
to higher or lower margins generated from each method of distribution depend upon the accepted selling price, level of involvement by
our employees in setting up and maintaining displays, distance traveled, and fuel consumed by our Company-owned fleet as well as freight
and shipping costs depending on the distance the product travels to the delivery point. Management is continually evaluating the profitability
of product delivery methods, analyzing alternate methods, and weighing economic inputs to determine the most efficient and cost-effective
method of delivery to fulfill the needs of our customers.
Major Product Classes
Frozen Food Products
Our frozen food products division
serves both food service and retail customers. We sell approximately 130 unique frozen food products through approximately 820 wholesalers,
cooperatives, and distributors.
Frozen Food Products
– Food Service Customers
The food service industry
is composed of establishments that serve food outside the home and includes restaurants, the food operations of health care providers,
schools, hotels, resorts, corporations, and other traditional and non-traditional food service outlets. Growth in this industry has been
driven by the increase in away-from-home meal preparation, which has accompanied the expanding number of both dual income and single-income
households. Another trend within the food service industry is the growth in the number of non-traditional food service outlets such as
convenience stores, retail stores and supermarkets. These non-traditional locations often lack extensive cooking, storage, or preparation
facilities resulting in a need for pre-cooked and prepared foods similar to those we provide. The expansion in the food service industry
has also been accompanied by the continued consolidation and growth of broadline and specialty food service distributors, many of which
are long-standing customers.
Frozen Food Products
– Retail Customers
The majority of our existing
and targeted retail customers are involved in the resale of branded and private label packaged foods. The same trends which have contributed
to the increase in away-from-home meal preparation have also fueled the growth in easy to prepare, microwaveable frozen and refrigerated
convenience foods. Among the fastest growing segments is the frozen and refrigerated hand-held foods market. This growth has been driven
by improved product quality and variety and the increasing need for inexpensive and healthy food items that require minimal preparation.
Despite rapid growth, many categories of frozen and refrigerated hand-held foods have achieved minimal household penetration. We believe
we have been successful in establishing and maintaining supply relationships with certain selected leading retailers in this market.
Frozen Food Products
– Sales and Marketing
Our frozen food business covers
the United States. Products produced by the Frozen Food Products segment are generally supplied to food service and retail distributors
who take title to the product upon shipment receipt. The Company plans to shift away from Company-leased long-haul vehicles toward less
costly transportation methods such as common carriers. In addition to regional sales managers, we maintain a network of independent food
service and retail brokers covering most of the United States. Brokers are compensated on a commission basis. We believe that our broker
relationships, in close cooperation with our regional sales managers, are a valuable asset providing significant new products and customer
opportunities. Regional sales managers perform several significant functions for us, including identifying and developing new business
opportunities and providing customer service and support to our distributors and end purchasers through the effective use of our broker
network.
Our annual advertising expenditure
is directed towards retail and institutional (foodservice) customers. These customers participate in various special promotional and marketing
programs and direct advertising allowances we sponsor. We also invest in general consumer advertising in various periodicals, and coupons
to advertise in major markets. We direct advertising toward food service customers with campaigns in major industry publications and through
our participation in trade shows throughout the United States. Our advertising strategy includes our presence on social media and online
distribution of promotional material.
Snack Food Products
During fiscal year 2024, our
snack food products division sold approximately 170 different items through customer-owned distribution centers and a direct-store-delivery
network serving approximately 21,000 supermarkets, mass merchandise and convenience retail stores located in 50 states.
Products produced or distributed
by the Snack Food Products segment are supplied to customers through either direct delivery to customer warehouses or direct-store-delivery
to retail locations. We utilize customer managed warehouse distribution centers to lower distribution cost. Product delivered to the customer’s
warehouse is then distributed to the store where it is resold to the end consumer. Our direct-store-delivery system focus emphasizes high
quality service and supply of our premium branded products to our customers. We also provide the service of setting up and maintaining
the display and restocking our products.
Snack Food Products
— Customers
Our customers are comprised
of large retail chains and smaller “independent” or non-chain operators. This part of our business is highly competitive.
Proper placement of our product lines is critical to selling success since most items could be considered “impulse” items
which are often consumed shortly after purchase. Our ability to sell successfully to this distribution channel depends on aggressive marketing
and maintaining relationships with key buyers.
Snack Food Products
— Sales and Marketing
Snack food products are distributed
across the United States. Regional sales managers perform several significant functions including identifying and developing new business
opportunities and providing customer service and support to our customers. We also utilize the services of brokers, where appropriate,
to support efficient product distribution and customer satisfaction. Bridgford is the primary sponsor for several professional anglers
that compete at the highest level of competitive bass fishing. In addition to our Bridgford Pro Fishing team, which consists of Pro Anglers
from the Bass Master Elites, FLW Tour, and Major League Fishing, we have also launched our Bridgford Outdoors Ambassador program to continue
to grow and support others who share our passion for the outdoors.
Product Planning and Research
and Development
We continually monitor the
consumer acceptance of each product within our extensive product line. Individual products are regularly added to and deleted from our
product line. Historically, the addition or deletion of any individual product has not had a material effect on our operations at the
end of the fiscal year. We believe that a key factor in the success of our products is our system of carefully targeted research and testing
of our products to ensure high quality and that each product matches an identified market opportunity. The emphasis in new product introductions
in the past several years has been on single-serve items. We are constantly striving to develop new products to complement our existing
product lines and improve processing techniques and formulas. We utilize an in-house test kitchen and consultants to research and experiment
with unique food preparation methods, improve quality control and analyze new ingredient mixtures.
Competition
Our products are sold under
highly competitive conditions. All food products can be considered competitive with other food products, but we consider our principal
competitors to include national, regional, and local producers and distributors of refrigerated, frozen and non-refrigerated snack food
products. Several of our competitors include large companies with substantially greater financial and marketing resources than ours. Existing
competitors may broaden their product lines and potential competitors may enter or increase their focus on our markets, resulting in greater
competition for us. We believe that our products compete favorably with those of our competitors. Such competitors’ products compete
against ours for retail shelf space, institutional distribution, and customer preference. Innovation, high quality and consistency are
the major attributes of our products.
Effect of Government Regulations
Our operations are subject
to extensive inspection and regulation by the United States Department of Agriculture (the “USDA”), the Food and Drug Administration
(the “FDA”), and by other federal, state, and local authorities regarding the processing, packaging, storage, transportation,
distribution, and labeling of products that we manufacture, produce and process. Our processing facilities and products are subject to
continuous inspection by the USDA and/or other federal, state, and local authorities. The USDA has issued strict regulations concerning
the control of listeria monocytogenes in ready-to-eat meat and poultry products and contamination by food borne pathogens such as E. coli
and salmonella and implemented a system of regulation known as the Hazard Analysis Critical Control Points (“HACCP”) program.
The HACCP program requires all meat and poultry processing plants to develop and implement sanitary operating procedures and other program
requirements. OSHA oversees safety compliance and establishes certain employer responsibilities to help “assure safe and healthful
working conditions” and keep the workplace free of recognized hazards or practices likely to cause death or serious injury. We believe
that we are currently in compliance with governmental laws and regulations and that we maintain the necessary permits and licenses relating
to our operations.
To date, federal, state, and
local environmental laws and regulations, including those relating to the discharge of materials into the environment, and the resources
we expend to comply with such regulations, have not had a material effect on our business.
Importance of Key Customers
Sales to Wal-Mart® comprised
27.8% of revenues in fiscal year 2024 and 25.4% of total accounts receivable was due from Wal-Mart® as of November 1, 2024. Sales
to Wal-Mart® comprised 29.1% of revenues in fiscal year 2023 and 26.5% of total accounts receivable was due from Wal-Mart® as
of November 3, 2023. Sales to Dollar General® comprised 14.2% of revenues in fiscal year 2024 and 20.2% of total accounts receivable
was due from Dollar General® as of November 1, 2024. Sales to Dollar General® comprised 16.3% of revenues in fiscal year 2023
and 20.5% of total accounts receivable was due from Dollar General® as of November 3, 2023.
Sources and Availability
of Raw Materials
We purchase large quantities
of pork, beef, and flour. These ingredients are generally available from a number of different suppliers although the availability of
these ingredients is subject to seasonal variation. We build ingredient inventories to take advantage of downward trends in seasonal prices
or anticipated supply limitations.
We purchase bulk flour under
short-term fixed price contracts at current market prices. The contracts are usually effective for and settle within three months or less.
We monitor and manage our ingredient costs to help negate volatile daily swings in market prices when possible. We do not participate
in the commodity futures market or hedging to limit commodity exposure.
Employees
We had 662 employees (648
full-time employees) as of November 1, 2024, approximately 42% of whose employment relationship is governed by collective bargaining agreements.
These agreements either “have expired” or “will expire” between June 2025 and February 2028. We believe that our
relationship with all of our employees is favorable and that any pending contracts will be settled favorably.
Availability of SEC Filings
and Code of Conduct on Internet Website
We maintain a website at www.bridgford.com.
Available through the “Investors” link on this website, free of charge, are our annual reports on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K and amendments thereto, and reports filed under Section 16 of the Exchange Act, filed with the
Securities and Exchange Commission (the “SEC”). Our Code of Conduct is also available on the website through the “Governance”
link. The information contained on the website is not incorporated by reference into this filing. Further, our reference to the website
URL is intended to be an inactive textual reference only.
Item 1A. Risk Factors
In addition to the other matters
set forth in this Report, the continuing operations and the price of our common stock are subject to the following risks, each of which
could materially adversely affect our business, financial condition, and results of operations. The risks described below are only the
risks that we currently believe are material to our business. However, additional risks not presently known, or risks that are currently
believed to be immaterial, may also impair our business operations.
We are subject to general
risks in the food industry, including, among other things, risk relating to changes in consumer preferences and product contamination
as well as general economic conditions, any of which, if realized, could negatively impact our operating results and financial position.
The food industry, and the
markets within the food industry in which we compete, are subject to various risks, including the following: evolving consumer preferences,
nutritional and health-related concerns, federal, state, and local food inspection and processing controls, consumer product liability
claims, risks of product tampering, and the availability and expense of liability insurance. The meat and poultry industries are subject
to scrutiny due to the association of meat and poultry products with recent outbreaks of illness, and on rare occasions even death, caused
by food borne pathogens. Outbreaks of disease and other events, which may be beyond our control, could significantly affect demand for
and consumer perception of our food products and result in negative publicity that may have an adverse effect on our ability to market
our products successfully. Product recalls are also sometimes required in the food industry to withdraw contaminated or mislabeled products
from the market. Additionally, the failure to identify and react appropriately to changes in consumer trends, demands and preferences
could lead to, among other things, reduced demand, and price reduction for our products. Changes in consumer eating habits may also result
in the enactment or amendment of laws and regulations that impact the sourcing, ingredients, and nutritional content of our food products.
Finally, we may be adversely affected by changes in domestic or foreign economic conditions, including inflation or deflation, interest
rates, availability of capital markets, consumer spending rates, and energy availability and costs (including fuel surcharges). We have
been experiencing high levels of inflations these past few years, which has had varying impacts on our business. Such prolonged periods
of inflation decrease consumers’ discretionary spending, which negatively impacts our results of operations. These and other general risks
related to the food industry, if realized by us, could have a significant adverse effect on demand for our products, as well as the costs
and availability of raw materials, ingredients, and packaging materials, thereby negatively affecting our operating results and financial
position.
Climate change and related
climate change regulations, including with respect to greenhouse gas effects, may negatively affect our results of operations.
Climate change and rising
global temperatures may contribute to changing weather patterns, droughts, heavier or more frequent storms and wildfires, and increased
frequency and severity of natural disasters. If such climate change has a negative impact on agricultural productivity, we may have decreased
availability or less favorable pricing for the raw materials necessary for our operations. Increased frequency or duration of extreme
weather conditions could cause disruptions in our operations and supply chain, or impact demand for our products.
Increasing concern over climate
change also may result in additional legal or regulatory requirements designed to manage greenhouse gas emissions, climate risks, and
resulting environmental impacts. If such requirements are enacted, we could experience significant cost increases in our operations and
supply chain.
Further, such requirements
may obligate us to make certain climate-related disclosures and set goals for reducing our carbon footprint. While we are committed
to mitigating our impact on the environment and managing greenhouse gas emissions, there can be no assurance that we will accomplish such
goals. If we fail to achieve any such goals related to climate change or the related expectations from stakeholders and consumers
are not met, the resulting negative publicity could adversely impact our results of operations in part as a consequence of changes in
consumer preferences for our products.
Fluctuations in commodity
prices and the availability of raw materials could negatively impact our financial results.
We purchase large quantities
of commodity pork, beef, and flour. Historically, market prices for products we process have fluctuated in response to a number of factors,
including changes in the United States government farm support programs, changes in international agricultural and trading policies, weather,
and other conditions during the growing and harvesting seasons. Our operating results are heavily dependent upon the prices paid for raw
materials, as well as the available supply of commodities. Commodity costs have and may continue to fluctuate due to political and economic
conditions, including the ongoing conflict between Ukraine and Russia. The marketing of our value-added products does not lend itself
to instantaneous changes in selling prices. In addition, if we increase prices to offset higher costs, we could experience lower demand
for our products and sales volumes. Conversely, decreases in our commodity and other input costs may create pressure on us to decrease
our prices. Changes in selling prices are relatively infrequent and do not compare with the volatility of commodity markets. If there
is a lag between when costs increase and when we are able to increase selling prices, our profits margins may suffer. Production and pricing
of commodities, on the other hand, are determined by constantly changing market forces of supply and demand over which we have limited
or no control. Such factors include, among other things, weather patterns throughout the world, outbreaks of disease, the global level
of supply inventories and demand for grains and other feed ingredients, as well as agricultural and energy policies of domestic and foreign
governments. While fluctuations in significant cost structure components, such as ingredient commodities and fuel prices, have had a significant
impact on profitability over the last three years, the impact of general price inflation on our financial position and results of operations
has been significant. However, current inflationary market conditions may have a negative impact on future earnings. Future volatility
of general price inflation or deflation and raw material cost and availability could adversely affect our financial results.
We are subject to extensive
government regulations and a failure to comply with such regulations could negatively impact our financial results.
Our operations are subject
to extensive inspection and regulation by the USDA, FDA and by other federal, state, and local authorities regarding the processing, packaging,
storage, transportation, distribution, and labeling of products that are manufactured, produced, and processed by us. Our processing facilities
and products are subject to continuous inspection by the USDA and/or other federal, state, and local authorities. The USDA has issued
strict regulations concerning the control of listeria monocytogenes in ready-to-eat meat and poultry products and contamination by food
borne pathogens such as E. coli and salmonella and implemented a system of regulation known as the HACCP program. The HACCP program requires
all meat and poultry processing plants to develop and implement sanitary operating procedures and other program requirements. OSHA oversees
safety compliance and establishes certain employer responsibilities to help “assure safe and healthful working conditions”
and keep the workplace free of recognized hazards or practices likely to cause death or serious injury. We believe that we are currently
in compliance with governmental laws and regulations and that we maintain necessary permits and licenses relating to our operations.
A failure to obtain or a loss
of necessary permits and licenses could delay or prevent us from meeting current product demand and could adversely affect our operating
performance. Furthermore, we are routinely subject to new or modified laws, regulations, and accounting standards. If found to be out
of compliance with applicable laws and regulations in these or other areas, we could be subject to civil remedies, including fines, injunctions,
recalls, or asset seizures, as well as potential criminal sanctions, any of which could have a significant adverse effect on our financial
results.
We depend on our key management,
the loss of which could negatively impact our operations.
Our executive officers and
certain other key employees have been primarily responsible for the development and expansion of our business, and the loss of the services
of one or more of these individuals could adversely affect us. Our success will be dependent in part upon our continued ability to recruit,
motivate, and retain qualified personnel. We cannot assure that we will be successful in this regard. We have no employment or non-competition
agreements with key personnel. However, we have consulting agreements with each of (1) our former Vice President and current director
Allan L. Bridgford Sr., (2) our former Chief Financial Officer and current director Raymond F. Lancy, (3) our former director and President
of Bridgford Food Processing Corporation Allan Bridgford Jr.
We depend on our major
customers and any loss of such customers could have a negative impact on our profitability.
Sales to Wal-Mart® comprised
27.8% of revenues in fiscal year 2024 and 25.4% of total accounts receivable was due from Wal-Mart® as of November 1, 2024. Sales
to Dollar General® comprised 14.2% of revenues in fiscal year 2024 and 20.2% of total accounts receivable was due from Dollar General®
as of November 1, 2024. Many of our customers, such as supermarkets, warehouse clubs, and food distributors have consolidated in recent
years. Such consolidation has produced large, sophisticated customers with increased buying power who are more capable of operating with
reduced inventories while demanding lower pricing and increased promotional programs. These customers also may use their shelf space for
their own private label products. Failure to respond to these trends could reduce our volume and cause us to lower prices or increase
promotional spending for our product lines, which could adversely affect our profitability.
Labor shortages and increased
turnover or increases in employee and employee-related costs could have adverse effects on our profitability.
We have historically experienced
some level of ordinary course of business turnover of employees. A number of factors have had and may continue to have adverse effects
on the labor force available to us, including reduced employment pools, federal unemployment subsidies, and other government regulations,
which include laws and regulations related to workers’ health and safety, wage and hour practices and immigration. Labor shortages
and increased turnover rates within our team members have led to and could in the future lead to increased costs, such as increased overtime
to meet demand and increased wage rates to attract and retain employees and could negatively affect our ability to efficiently operate
our production facilities or otherwise operate at full capacity. An overall or prolonged labor shortage, lack of skilled labor, increased
turnover or labor inflation could have a material adverse impact on our operations, results of operations, liquidity, or cash flows.
Disputes with labor unions
could have an adverse impact on our operations and financial results.
As of November 1, 2024, approximately
278 of our employees were covered by collective bargaining agreements. We depend on the availability of, and good relations with, our
teams’ members. If we fail to maintain good relations, we may experience strikes or work stoppages, which could have a material
adverse impact on our operations, results of operations, liquidity, or cash flows.
Our business and reputation
could suffer if we experience security breaches and other disruptions to our information technology infrastructure.
We are dependent on information
technology systems, some of which are managed by third-parties, to process, transmit, and store electronic information and to manage or
support a variety of business processes and activities, including distribution, invoicing, and collection of payment. We also collect
and store confidential data from our customers and suppliers in data centers, which are owned by third parties and maintained on their
information technology networks. These complex systems are an important part of ongoing operations. Any failure of these systems could
disrupt our operations and could have a material adverse effect on our business, results of operations, and financial condition. Further,
despite our internal controls and security measures, there can be no assurance that we will be able to evade cyberattacks, disruptions,
or security breaches. We have implemented cyber-security initiatives to mitigate our exposure to these risks, but these measures may not
be adequate Although we have not suffered any significant cyber incidents that resulted in material business impact, we have from time
to time been, and expect to continue to be, the target of malicious cyber threat actors.
With approximately 80%
of our stock beneficially owned by the Bridgford family, there are risks that they can exert significant influence or control over our
corporate matters.
Members of the Bridgford family
beneficially own, in the aggregate, approximately 80% of our outstanding stock. In addition, two members of the Bridgford family currently
serve on the Board of Directors and two members of the Bridgford family serve on the Executive Committee. As a result, members of the
Bridgford family have the ability to exert substantial influence or actual control over our management and affairs and over substantially
all matters requiring action by our shareholders, including amendments to by-laws, election and removal of directors, any proposed merger,
consolidation or sale of all or substantially all of our assets and other corporate transactions. This concentration of ownership may
also delay or prevent a change in control otherwise favored by our other shareholders and could depress our stock price. Additionally,
as a result of the Bridgford family’s significant ownership of the outstanding voting stock, we have relied on the “controlled
company” exemption from certain corporate governance requirements of the NASDAQ stock market. Therefore, among other things, we
have elected not to implement the rule that provides for a nominating committee to identify and recommend nominees to the Board of Directors
and have instead elected to have the full Board of Directors perform such function. However, we have not elected to rely on the exemption
with respect to our compensation committee, which is made up entirely of independent directors and has sole authority to determine the
compensation of our executive officers, including our Chairman of the Board.
We participate in Multiemployer
Pension Plans which could negatively impact our operations and profitability.
We participate in “multiemployer”
pension plans administered by labor unions on behalf of their employees. We make monthly contributions for healthcare and pension benefit
obligations. The contribution amount may change depending upon the ability of participating companies to fund these pension liabilities
as well as the actual and expected returns on pension plan assets. Volatility in the capital markets or interest rates can impact the
market value of plan assets and cause volatility in the net periodic benefit cost and our future funding requirements. The exact amount
of cash contributions made to the pension plans in any year is dependent upon a number of factors, including minimum funding requirements.
In addition, should we withdraw from the union and cease participation in a union plan, federal law could impose a penalty for additional
contributions to the plan. The penalty would be recorded as an expense in the consolidated statement of operations. The ultimate amount
of the withdrawal liability is dependent upon several factors including the funded status of the plan and contributions made by other
participating companies. We continue to participate in other multiemployer union plans. In the event of a full or partial withdrawal from
these plans, the impact on our financial statements could be material.
Eminent domain and land
risk regulations could negatively impact our financial results and financial position.
We own real property on which
we operate our processing and/or our distribution operations. As is the case with any owner of real property, we may be subject to eminent
domain proceedings that can impact the value of investments we have made in real property as well as potentially disrupt our business
operations. If subject to eminent domain proceedings or other government takings, we may not be adequately compensated.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
We maintain an information
security and cybersecurity program, as well as a cybersecurity governance framework, which are designed to protect our information systems
against operational risks related to cybersecurity.
Cybersecurity Risk Management and Strategy
We recognize the importance
of assessing, identifying, and managing material risks associated with cybersecurity threats which include, among other things, operational
risks, intellectual property theft, fraud or extortion, harm to employees or customers, violation of privacy or security laws and related
litigation and legal risk, and reputational risks.
We have developed and implemented
a cybersecurity risk management program overseen by our Audit Committee intended to protect the confidentiality, integrity, and availability
of our critical systems and information, and detect and contain any cybersecurity incidents that impact us. The program is integrated
into our overall risk management systems and processes, and includes a cybersecurity risk assessment process that routinely evaluates
potential impacts of cybersecurity risks on our business, including risks from cybersecurity threats associated with our use of third-party
service providers. These assessments inform our cybersecurity risk mitigation strategies. The results are regularly shared with our information
technology committee comprised of our Vice President of Information Technology, our Information Technology Manager, our President and
our Chief Financial Officer (the “IT Steering Committee”) and the Audit Committee of our Board as part of the committees’
involvement in managing and overseeing cybersecurity risks.
Our cybersecurity risk management
program also includes processes to triage, assess the severity of, escalate, contain, investigate, and remediate an incident, as well
as to comply with potentially applicable legal obligations and mitigate brand and reputational damage. If a cybersecurity incident is
determined to be a potentially material cybersecurity incident, our disclosure controls and procedures define the steps to determine materiality
and disclose such a material cybersecurity incident.
In addition, we engage
an independent third-party provider in connection with our cybersecurity risk management program to monitor cybersecurity threats and
provide certain security measures. We regularly engage with this provider to aid in the identification and remediation of potential threats.
This provider has qualifications that include Microsoft Certified: Security, Compliance, and Identity Fundamentals, Certified Information
Systems Security Professional (CISSP), Certified Hacking Forensic Investigator, Certified Ethical Hacker (CEH) and Security+.
While we believe that our
business strategy, results of operations or financial condition have not been materially adversely affected by any cybersecurity incidents,
cybersecurity threats are pervasive and, similar to other institutions, we, as well as our employees, customers, regulators, service providers,
and other third parties have experienced a significant increase in information security and cybersecurity risk in recent years and will
likely continue to be the potential target of cyber attacks. We continue to assess the risks and changes in the cyber environment and
invest in enhancements to our cybersecurity capabilities as deemed necessary to promote advancements in our cybersecurity capabilities.
Cybersecurity Governance
Our cybersecurity risk management
program is overseen by the Audit Committee and led by the IT Steering Committee. Our Audit Committee is responsible in overseeing risks
from cybersecurity threats, and has the authority to regularly review the adequacy of our cybersecurity, information and technology security,
and data privacy programs, procedures, and policies. Our IT Steering Committee, led by the Vice President of Information Technology,
is primarily responsible for monitoring, assessing, and managing material risks from cybersecurity threats.
The Audit Committee regularly
receives updates from the IT Steering Committee / management with respect to our efforts to manage data protection, cybersecurity, and
information and technology risks, and assesses the results of reviews from internal audits. Materials presented to our Audit Committee
by our IT Steering Committee include updates on our data security posture, results from internal audit and third-party assessments, our
incident response plan, and certain cybersecurity threat risks or incidents and developments, as well as the steps management has taken
to respond to such risks. The Audit Committee / IT Steering Committee also regularly engages with management on technology risk-related
topics.
Our processes also allow for our Board and the
Audit Committee to be informed of key cybersecurity risks outside the regular reporting schedule. While the Audit Committee meets periodically,
the Audit Committee is authorized to meet with management or individual directors at any time it deems appropriate to discuss matters
relevant to the committee. Our policy is for the Board and the Audit Committee to receive prompt and timely information regarding any
cybersecurity risk (including any incident) that meets reporting thresholds, as well as ongoing updates regarding any such risk.
Item 2. Properties
We own the following properties
as of November 1, 2024:
Property Location Building Square Footage Acreage
Statesville, North Carolina * 42,000 8.0
* - property used by Frozen Food Products Segment.
** - property used by Snack Food Products Segment.
We utilize each of the foregoing
properties for processing, warehousing, distributing and administrative purposes. We also lease warehouse and/or office facilities throughout
the United States through month-to-month rental agreements. We believe that our properties are generally adequate to satisfy our foreseeable
needs. Additional properties may be acquired and/or plants expanded if favorable opportunities and conditions arise.
Item 3. Legal Proceedings
No material legal proceedings
were pending against us as of November 1, 2024, or as of the date of filing of this Report. We are likely to be subject to claims arising
from time to time in the ordinary course of our business. In certain of such actions, plaintiffs may request punitive or other damages
that may not be covered by insurance and, accordingly, no assurance can be given with respect to the ultimate outcome of any such possible
future claims or litigation or their effect on us. Any adverse litigation trends and outcomes could significantly and negatively affect
our financial results.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant’s Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Common Stock and Dividend
Data
Our common stock is traded
on the Nasdaq Global Market under the symbol “BRID”.
As of January 22, 2025, there
were 1,031 shareholders of record in our common stock.
The payment of future dividends,
if any, will be at the discretion of our Board of Directors and will depend upon future earnings, financial requirements, and other factors.
Unregistered Sales of Equity
Securities
During the period covered
by this Report, we did not sell or issue any equity securities that were not registered under the Securities Act of 1933, as amended.
Repurchases of Equity Securities
by the Issuer
Our stock repurchase program
was approved by our Board of Directors in November 1999 and was expanded in June 2005. Under the stock repurchase program, we are authorized,
at the discretion of management and our Board of Directors, to purchase up to an aggregate of 2,000,000 shares of our common stock on
the open market. During fiscal years 2024 and 2023, we did not repurchase any shares of our common stock pursuant to our stock repurchase
program previously authorized by the Board of Directors. As of November 1, 2024, 120,113 shares remained authorized for repurchase under
the program.
Item 6. [Reserved]
Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations
For a complete understanding,
this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the
Consolidated Financial Statements and Notes to the Consolidated Financial Statements contained in this Report.
Certain statements under “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Report constitute forward-looking
statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 (refer to Part I, Item 1. Business
for more information).
Results of Operations (dollars in thousands)
Fiscal Year Ended November 1, 2024 (52 weeks)
Compared to Fiscal Year Ended November 3, 2023 (53 weeks)
Net Sales-Consolidated
Net sales in fiscal year 2024 decreased $27,991
(11.1%) when compared to the prior fiscal year. The changes in net sales were comprised as follows:
Impact on Net Sales-Consolidated % $
Selling price per pound -0.4 (1,138 )
Unit sales volume in pounds -8.8 (23,988 )
Promotional activity -1.8 (3,242 )
Net Sales-Frozen Food Products Segment
Net sales in the Frozen Food Products segment
in fiscal year 2024 increased $770 (1.3%) compared to the prior fiscal year. The changes in net sales were comprised as follows:
Impact on Net Sales-Frozen Food Products % $
Selling price per pound 3.2 2,117
Unit sales volume in pounds -1.3 (837 )
Promotional activity -0.9 (687 )
Increase in net sales 1.3 770
The increase in net sales for fiscal year 2024
primarily relates to higher selling prices per pound partially offset by lower unit sales volume in pounds. The increase in net sales
was primarily driven by a significant increase in volume to institutional customers and an increase in selling price per pound due to
price increases implemented during the fourth quarter of fiscal year 2023. Other institutional Frozen Food Products sales, including sheet
dough and rolls, increased 8% by volume and retail sales volume decreased 8%. Returns activity decreased compared to the 2023 fiscal year.
Promotional activity was higher in fiscal year 2024 as a percentage of sales due to increased sales to high promotion customers.
Net Sales-Snack Food Products Segment