Seneca Foods Reports Sales and Earnings for the Quarter and Nine Months Ended December 30, 2023
09 February 2024 - 8:15AM
Seneca Foods Corporation (NASDAQ: SENEA, SENEB) today announced
financial results for the third quarter and nine months ended
December 30, 2023.
Executive Summary (vs. year-ago, year-to-date
results):
- Net sales for the nine months ended
December 30, 2023 totaled $1,150.6 million compared to $1,178.3
million for the nine months ended December 31, 2022. The
year-over-year decrease of $27.7 million was mainly due to lower
sales volumes partially offset by higher selling prices.
- Gross margin as a percentage of net
sales for the nine months ended December 30, 2023 is 14.6% as
compared to 10.0% for the nine months ended December 31, 2022.
- Reported net earnings were $65.6
million and $42.3 million for the nine months ended December 30,
2023 and December 31, 2022, respectively.
“Third quarter results continued a strong fiscal
2024 for the Company. Decreasing LIFO charges compared to last year
as a result of moderating inflation had a positive impact on
reported net earnings,” stated Paul Palmby, President and Chief
Executive Officer of Seneca Foods. “Additionally, we are well along
with the integration of the Green Giant shelf stable business that
we acquired during the quarter and remain pleased with the positive
impact the business is delivering; we are excited about the
potential for this iconic brand.”
Executive Summary (vs. year-ago, third quarter
results):
- Net sales for the third quarter of
fiscal 2024 totaled $444.5 million compared to $473.3 million for
the third quarter of fiscal 2023. The year-over-year decrease of
$28.8 million was mainly due to lower sales volumes partially
offset by higher selling prices.
- Gross margin as a percentage of net
sales is 12.2% for the three months ended December 30, 2023 as
compared to 11.4% for the three months ended December 31,
2022.
- Reported net earnings were $17.7
million and $21.1 million for the three months ended December 30,
2023 and December 31, 2022, respectively.
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 approximately 1,400 American farms and are
distributed to approximately 60 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. 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).
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Three Months Ended |
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Nine Months Ended |
|
December 30, 2023 |
|
December 31, 2022 |
|
December 30, 2023 |
|
December 31, 2022 |
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Earnings before income taxes, as reported |
$ |
23,199 |
|
$ |
27,557 |
|
$ |
86,037 |
|
$ |
55,282 |
LIFO charge |
12,027 |
|
30,898 |
|
19,643 |
|
79,333 |
Adjusted earnings before
income taxes |
35,226 |
|
58,455 |
|
105,680 |
|
134,615 |
Income taxes |
8,519 |
|
14,197 |
|
25,363 |
|
32,748 |
Adjusted net earnings |
$ |
26,707 |
|
$ |
44,258 |
|
$ |
80,317 |
|
$ |
101,867 |
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|
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).
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Three Months Ended |
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Nine Months Ended |
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EBITDA and FIFO EBITDA: |
December 30, 2023 |
|
|
December 31, 2022 |
|
|
December 30, 2023 |
|
|
December 31, 2022 |
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Net earnings |
$ |
17,675 |
|
|
$ |
21,054 |
|
|
$ |
65,565 |
|
|
$ |
42,288 |
|
Income tax expense |
5,524 |
|
|
6,503 |
|
|
20,472 |
|
|
12,994 |
|
Interest expense, net of
interest income |
9,388 |
|
|
4,277 |
|
|
23,146 |
|
|
8,037 |
|
Depreciation and
amortization |
12,645 |
|
|
12,980 |
|
|
38,070 |
|
|
39,721 |
|
Interest amortization |
(113 |
) |
|
(60 |
) |
|
(327 |
) |
|
(181 |
) |
EBITDA |
45,119 |
|
|
44,754 |
|
|
146,926 |
|
|
102,859 |
|
LIFO charge |
12,027 |
|
|
30,898 |
|
|
19,643 |
|
|
79,333 |
|
FIFO EBITDA |
$ |
57,146 |
|
|
$ |
75,652 |
|
|
$ |
166,569 |
|
|
$ |
182,192 |
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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 environmental
and health 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
Officer585-495-4100
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Seneca Foods Corporation |
Unaudited Selected Financial Data |
For the Periods Ended December 30, 2023 and December 31, 2022 |
(In thousands of dollars, except share data) |
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Three Months Ended |
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Nine Months Ended |
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December 30, |
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December 31, |
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|
December 30, |
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December 31, |
|
|
2023 |
|
|
2022 |
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|
2023 |
|
|
2022 |
|
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|
|
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Net sales |
$ |
444,481 |
|
|
$ |
473,254 |
|
|
$ |
1,150,620 |
|
|
$ |
1,178,289 |
|
|
|
|
|
|
|
|
|
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Plant restructuring (income)
charge (note 2) |
$ |
(42 |
) |
|
$ |
1,829 |
|
|
$ |
107 |
|
|
$ |
1,937 |
|
|
|
|
|
|
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|
|
|
|
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Other operating expense
(income), net (note 3) |
$ |
392 |
|
|
$ |
229 |
|
|
$ |
(1,151 |
) |
|
$ |
(2,411 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (note 1) |
30,762 |
|
|
29,817 |
|
|
104,683 |
|
|
58,249 |
|
Other non-operating
income |
(1,825 |
) |
|
(2,017 |
) |
|
(4,500 |
) |
|
(5,070 |
) |
Interest expense, net |
9,388 |
|
|
4,277 |
|
|
23,146 |
|
|
8,037 |
|
Earnings before income taxes |
$ |
23,199 |
|
|
$ |
27,557 |
|
|
$ |
86,037 |
|
|
$ |
55,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
5,524 |
|
|
6,503 |
|
|
20,472 |
|
|
12,994 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
$ |
17,675 |
|
|
$ |
21,054 |
|
|
$ |
65,565 |
|
|
$ |
42,288 |
|
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Basic earnings per common share |
$ |
2.47 |
|
|
$ |
2.77 |
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|
$ |
8.86 |
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|
$ |
5.36 |
|
Diluted earnings per common share |
$ |
2.45 |
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$ |
2.74 |
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|
$ |
8.78 |
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$ |
5.31 |
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Note
1: |
The effect of the LIFO inventory valuation method on the third
quarter pre-tax results decreased operating earnings by $12.0
million and $30.9 million for the three months ended December 30,
2023 and December 31, 2022, respectively. The effect of the LIFO
inventory valuation method on YTD nine months pre-tax results
decreased operating earnings by $19.6 million and $79.3 million for
the nine months ended December 30, 2023 and December 31, 2022,
respectively. |
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Note 2: |
During the three and nine months ended December 30, 2023,
respectively, the Company incurred restructuring charges primarily
due to plants that were closed in previous periods. During the
three and nine months ended December 31, 2022, respectively, the
Company incurred restructuring charges primarily associated with
ceasing production of green beans at a plant in the Northeast. The
charges were comprised of severance costs and a write down of
production equipment that was sold during the subsequent twelve
months. |
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Note 3: |
The Company had net other operating expense of $0.4 million during
the three months ended December 30, 2023, which was driven by $0.6
million of transition service fees incurred in connection with an
asset acquisition. During the three months ended December 31, 2022,
the Company had net other operating expense of $0.2 million, which
was driven primarily by a write down of idle production equipment
to estimated selling price, less commission, as the assets met the
criteria to be classified as held for sale at December 31, 2022.
The write down was partially offset by a gain on the sale of an
aircraft. The Company had net other operating income of $1.2
million during the nine months ended December 30, 2023, which was
driven primarily by $1.8 million from the sale of non-operational
assets in the Pacific Northwest, offset by $0.6 million of
transition service fees during the nine-month period. During the
nine months ended December 31, 2022, the Company had net other
operating income of $2.4 million, which was driven primarily by a
gain on the sale of the Company’s western trucking fleet amongst
other fixed assets and a true-up of the supplemental early
retirement plan accrual, partially offset by the aforementioned
write down of idle production equipment. |
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Note 4: |
The Company used the “two-class” method for basic earnings per
share by dividing the net earnings attributable to common
shareholders by the weighted average of common shares outstanding
during the period. |
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