Discontinued Operations

9 Months Ended

Mar. 31, 2024

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Note 3. Discontinued Operations

On June 30, 2023, the Company completed the sale of certain assets of the Company related to its direct ship and private label business, including the Company’s production facility and corporate office building in Northlake, Texas, pursuant to that certain Asset Purchase Agreement dated as of June 6, 2023, by and between the Company and TreeHouse Foods, Inc. (the "Buyer"), as amended by that certain Amendment to the Asset Purchase Agreement, dated June 30, 2023.

The accounting requirements for reporting the Sale as a discontinued operation were met when the Sale was completed as of June 30, 2023. Accordingly, the consolidated financial statements reflect the results of the Sale as a discontinued operation. During Q2 2024, the Company recorded a net loss of $1.2 million related to a working capital adjustment in continuing operations.

The Company also entered into (i) a Transition Services Agreement with the Buyer pursuant to which the Company will provide the Buyer certain specified services on a temporary basis, (ii) a Co-Manufacturing Agreement with the Buyer pursuant to which the Company and Buyer will manufacture certain products for each other on a temporary basis and (iii) a Lease Agreement with the Buyer pursuant to which the Company will lease office and warehouse space from the Buyer on a temporary basis. The Transition Services Agreement expired on March 31, 2024.

There was no activity related to the discontinued operations for the three and nine months ended March 31, 2024. The operating results of the divested operations have been reclassified as discontinued operations in the Consolidated Statements of Operations for the three and nine months ended March 31, 2023, as detailed in the table below:

(In thousands)	Three Months Ended March 31, 2023		Nine Months Ended March 31, 2023
Net sales	$	38,511	$	123,838
Cost of goods sold	38,595		124,977
Gross loss	(84)		(1,139)
Selling expenses	1,632		5,055
General and administrative expenses	1,115		3,619
Operating expense	2,747		8,674
Loss from discontinued operations	(2,831)		(9,813)
Other (expense) income:
Interest expense	(1,983)		(6,276)
Other, net	318		873
Total other expense	(1,665)		(5,403)
Loss from discontinued operations before taxes	(4,496)		(15,216)
Income tax benefit	—		—
Loss from discontinued operations, net of income taxes	$	(4,496)	$	(15,216)

Interest expense for the Revolver (as defined below) was allocated on a ratio of net assets discontinued to the sum of consolidated net assets plus consolidated debt and the Term Loan (as defined below) was fully allocated to discontinued operations as it was required to be repaid in full.

Applicable Consolidated Statements of Cash Flow information related to the divested operations for the nine month period ended March 31, 2023 is detailed in the table below:

(In thousands)	March 31, 2023
Cash Flows from Discontinued Operations
Net cash used in operating activities	$	(20,339)
Net cash used in investing activities	(1,787)

Note 21. Sales of Assets

Sale of Branch Properties

During the nine months ended March 31, 2024, the Company completed the sale of 12 branch properties. The total sales price was $25.9 million and net proceeds was $23.9 million. The completed sale of branch properties resulted in a gain on sale of $19.4 million.