FAIRPORT, N.Y., Nov. 06, 2024 (GLOBE NEWSWIRE) — Seneca Foods Corporation (NASDAQ: SENEA, SENEB) today announced financial results for the second quarter and six months ended September 28, 2024.
Executive Summary (vs. year-ago, year-to-date results):
- Net sales for the six months ended September 28, 2024 totaled $730.2 million compared to $706.1 million for the six months ended September 30, 2023. The year-over-year increase of $24.1 million was due primarily to higher sales volumes.
- Gross margin as a percentage of net sales is 11.7% for the six months ended September 28, 2024, as compared to 16.1% for the six months ended September 30, 2023.
“Second quarter results reflect continued positive volume momentum in our core business, as case volumes were up 9.9% in the first six months year-over-year when excluding co-pack business, which has been negatively impacted by the timing of purchases compared to last year,” stated Paul Palmby, President and Chief Executive Officer of Seneca Foods. “Inventory reductions associated with a smaller planned pack and unfavorable growing weather in the Midwest are leading to increased unit costs in F25, but total cash outlays are significantly down. As a result, working capital trends and operating cash flow are favorable compared to the prior year.”
Executive Summary (vs. year-ago, second quarter results):
- Net sales for the second quarter of fiscal 2025 totaled $425.5 million compared to $407.5 million for the second quarter of fiscal 2024. The year-over-year increase of $18.0 million was due to higher sales volumes, coupled with product mix and increased selling prices.
- Gross margin as a percentage of net sales is 10.1% for the three months ended September 28, 2024, as compared to 14.3% for the three months ended September 30, 2023.
About Seneca Foods Corporation
Seneca Foods is one of North America’s leading providers of packaged fruits and vegetables, with facilities located throughout the United States. Its high quality products are primarily sourced from more than 1,200 American farms and are distributed to approximately 55 countries. Seneca holds a large share of the market for retail private label, food service, restaurant chains, international, contracting packaging, industrial, chips and cherry products. Products are also sold under the highly regarded brands of Libby’s®, Green Giant®, Aunt Nellie’s®, Green Valley®, CherryMan®, READ®, and Seneca labels, including Seneca snack chips. Seneca’s common stock is traded on the Nasdaq Global Select Market under the symbols “SENEA” and “SENEB”. SENEA is included in the S&P SmallCap 600, Russell 2000 and Russell 3000 indices.
Non-GAAP Financial Measures
Adjusted net earnings is calculated on a FIFO basis and excludes the impact from the application of LIFO. The Company believes this non-GAAP financial measure provides for a better comparison of year over year operating performance. The Company does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP. Set forth below is a reconciliation of reported earnings before income taxes to adjusted net earnings (in thousands).
| Three Months Ended | Six Months Ended | |||||||||||
| September 28, | September 30, | September 28, | September 30, | |||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Earnings before income taxes, as reported | $ | 17,068 | $ | 32,577 | $ | 33,569 | $ | 62,838 | ||||
| LIFO charge | 14,977 | 9,316 | 12,059 | 7,616 | ||||||||
| Adjusted earnings before income taxes | 32,045 | 41,893 | 45,628 | 70,454 | ||||||||
| Income taxes | 7,434 | 10,118 | 10,559 | 16,844 | ||||||||
| Adjusted net earnings | $ | 24,611 | $ | 31,775 | $ | 35,069 | $ | 53,610 | ||||
Set forth below is a reconciliation of reported net earnings to EBITDA and FIFO EBITDA (earnings before interest, income taxes, depreciation, amortization and non-cash charges related to the LIFO inventory valuation method). The Company does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP (in thousands).
| Three Months Ended | Six Months Ended | ||||||||||||||
| September 28, | September 30, | September 28, | September 30, | ||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net earnings | $ | 13,303 | $ | 24,779 | $ | 25,964 | $ | 47,890 | |||||||
| Income taxes | 3,765 | 7,798 | 7,605 | 14,948 | |||||||||||
| Interest expense, net of interest income | 9,013 | 7,185 | 19,358 | 13,758 | |||||||||||
| Depreciation and amortization | 12,516 | 12,822 | 24,962 | 25,425 | |||||||||||
| Interest amortization | (116 | ) | (114 | ) | (231 | ) | (214 | ) | |||||||
| EBITDA | 38,481 | 52,470 | 77,658 | 101,807 | |||||||||||
| LIFO charge | 14,977 | 9,316 | 12,059 | 7,616 | |||||||||||
| FIFO EBITDA | $ | 53,458 | $ | 61,786 | $ | 89,717 | $ | 109,423 | |||||||
Forward-Looking Information
This release contains “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they address future events, developments, and results and do not relate strictly to historical facts. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain the words “will,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “seeks,” “should,” “likely,” “targets,” “may,” “can” and variations thereof and similar expressions. Forward-looking statements are subject to known and unknown risks, uncertainties, and other important factors that could cause actual results to differ materially from those expressed. We believe important factors that could cause actual results to differ materially from our expectations include, but are not limited to, the following:
- the effects of rising costs and availability of raw fruit and vegetables, steel, ingredients, packaging, other raw materials, distribution and labor;
- crude oil prices and their impact on distribution, packaging and energy costs;
- an overall labor shortage, ability to retain a sufficient seasonal workforce, lack of skilled labor, labor inflation or increased turnover impacting our ability to recruit and retain employees;
- climate and weather affecting growing conditions and crop yields;
- our ability to successfully implement sales price increases and cost saving measures to offset cost increases;
- the loss of significant customers or a substantial reduction in orders from these customers;
- effectiveness of our marketing and trade promotion programs;
- competition, changes in consumer preferences, demand for our products and local economic and market conditions;
- the impact of a pandemic on our business, suppliers, customers, consumers and employees;
- unanticipated expenses, including, without limitation, litigation or legal settlement expenses;
- product liability claims;
- the anticipated needs for, and the availability of, cash;
- the availability of financing;
- leverage and the ability to service and reduce debt;
- foreign currency exchange and interest rate fluctuations;
- the risks associated with the expansion of our business;
- the ability to successfully integrate acquisitions into our operations;
- our ability to protect information systems against, or effectively respond to, a cybersecurity incident or other disruption;
- other factors that affect the food industry generally, including:
- recalls if products become adulterated or misbranded, liability if product consumption causes injury, ingredient disclosure and labeling laws and regulations and the possibility that consumers could lose confidence in the safety and quality of certain food products;
- competitors’ pricing practices and promotional spending levels;
- fluctuations in the level of our customers’ inventories and credit and other business risks related to our customers operating in a challenging economic and competitive environment; and
- the risks associated with third-party suppliers, including the risk that any failure by one or more of our third-party suppliers to comply with food safety or other laws and regulations may disrupt our supply of raw materials or certain finished goods products or injure our reputation; and
- changes in, or the failure or inability to comply with, U.S., foreign and local governmental regulations, including health, environmental, and safety regulations.
Except for ongoing obligations to disclose material information as required by the federal securities laws, the Company does not undertake any obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of the filing of this report or to reflect the occurrence of unanticipated events.
Contact:
Michael Wolcott, Chief Financial Officer
585-495-4100
| Seneca Foods Corporation | |||||||||||||||||
| Unaudited Selected Financial Data | |||||||||||||||||
| For the Periods Ended September 28, 2024 and September 30, 2023 | |||||||||||||||||
| (In thousands of dollars, except share data) | |||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||
| September 28, | September 30, | September 28, | September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||
| Net sales | $ | 425,465 | $ | 407,475 | $ | 730,192 | $ | 706,139 | |||||||||
| Operating income (note 1) | 24,679 | 38,424 | 50,122 | 73,921 | |||||||||||||
| Other non-operating income | (1,402 | ) | (1,338 | ) | (2,805 | ) | (2,675 | ) | |||||||||
| Interest expense, net | 9,013 | 7,185 | 19,358 | 13,758 | |||||||||||||
| Earnings before income taxes | $ | 17,068 | $ | 32,577 | $ | 33,569 | $ | 62,838 | |||||||||
| Income taxes | 3,765 | 7,798 | 7,605 | 14,948 | |||||||||||||
| Net earnings | $ | 13,303 | $ | 24,779 | $ | 25,964 | $ | 47,890 | |||||||||
| Basic earnings per common share | $ | 1.92 | $ | 3.32 | $ | 3.74 | $ | 6.36 | |||||||||
| Diluted earnings per common share | $ | 1.90 | $ | 3.29 | $ | 3.70 | $ | 6.30 | |||||||||
| Note 1: | The effect of the LIFO inventory valuation method on the second quarter pre-tax results decreased operating income by $15.0 million and $9.3 million for the three months ended September 28, 2024 and September 30, 2023, respectively. The effect of the LIFO inventory valuation method on YTD six month pre-tax results decreased operating income by $12.1 million and $7.6 million for the six months ended September 28, 2024 and September 30, 2023, respectively. | ||||||||||
| Note 2: | The Company used the “two-class” method for basic earnings per share by dividing the earning attributable to common shareholders by the weighted average of common shares outstanding during the period. | ||||||||||
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