Seneca Foods Reports Net Earnings of $31.1 Million for the Quarter Ended December 26, 2015
February 02 2016 - 4:15PM
Seneca Foods Corporation (NASDAQ:SENEA) (NASDAQ:SENEB) reported for
the third quarter of 2016, net earnings of $31.1 million, or $3.10
per diluted share, compared to $7.8 million, or $0.71 per diluted
share, in the fiscal third quarter of 2015. Net sales
for the third quarter ended December 26, 2015 decreased from the
third quarter ended December 27, 2014 by 5.3%, or $24.0 million to
$432.2 million. The decrease is attributable to a sales
volume decrease of $44.0 million partially offset by favorable
sales mix and higher selling prices of $20.0 million.
The Company reported net earnings for the fiscal
nine months ended December 26, 2015 of $40.6 million, or $4.04 per
diluted share, compared to net earnings of $7.1 million, or $0.65
per diluted share for the same period in the prior year. In the
nine months ended December 27, 2015, net sales decreased $36.8
million, or 3.6% to $971.7 million. The decrease is attributable to
a sales volume decrease of $63.6 million partially offset by
favorable sales mix and higher selling prices of $26.8 million. A
major portion of the lower sales was due to a $17.9 million
reduction in Green Giant vegetable sales.
During the quarter ended December 26, 2015, the
Company recorded a gain of $24.3 million related to a contractual
payment received in conjunction with a relationship transfer
agreement with General Mills. Also during the third quarter
of fiscal 2016, the Company recorded a restructuring charge of $9.6
million related to the closing of a plant in the Northwest.
Excluding a non-cash after-tax LIFO credit of
$7.6 million, net earnings per diluted share were $2.34 during the
quarter ended December 26, 2015 versus $1.03 during the quarter
ended December 27, 2014, which included a non-cash LIFO charge of
$3.5 million. Excluding a non-cash after-tax LIFO credit of $8.6
million, net earnings per diluted share were $3.18 during the nine
months ended December 26, 2015, compared to $1.29 during the nine
months ended December 27, 2014 which included a non-cash LIFO
charge of $7.1 million.
About Seneca Foods
Corporation
Seneca Foods is North America’s leading provider
of packaged fruits and vegetables, with facilities located
throughout the United States. Its high quality products are
primarily sourced from over 2,000 American farms. Seneca
holds the largest share of the retail private label, food service,
and export canned vegetable markets, distributing to over 90
countries. Products are also sold under the highly
regarded brands of Libby’s®, Aunt Nellie’s®, READ®, and Seneca
labels, including Seneca snack chips. In addition, Seneca
provides vegetable products under a contract packing agreement with
B&G Foods North America, under the Green Giant label.
Seneca’s common stock is traded on the Nasdaq Global
Stock 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—Net
Earnings Excluding LIFO Impact, EBITDA and FIFO EBITDA
Net Earnings excluding LIFO, EBITDA and FIFO EBITDA are non-GAAP
financial measures. The Company believes these non-GAAP financial
measures provide a basis for comparison to companies that do not
use LIFO and enhance the understanding of the Company’s historical
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 net earnings and
reported diluted earnings per share to net earnings excluding LIFO
and diluted earnings per share excluding LIFO.
|
|
|
|
|
Quarter Ended |
|
|
December 26, 2015 |
|
December 27, 2014 |
|
|
Income |
|
Diluted |
|
Income |
|
Diluted |
|
|
(in millions) |
|
EPS |
|
(in millions) |
|
EPS |
|
|
|
|
|
|
|
|
|
Net earnings, as
reported: |
$ |
|
31.1 |
|
$ |
|
3.10 |
|
$ |
7.8 |
$ |
0.71 |
|
|
|
|
|
|
|
|
|
LIFO (credit) charge,
after tax at statutory federal rate |
$ |
|
(7.6 |
) |
$ |
|
(0.76 |
) |
$ |
3.5 |
$ |
0.32 |
|
|
|
|
|
|
|
|
|
Net earnings, excluding
LIFO impact |
$ |
|
23.5 |
|
$ |
|
2.34 |
|
$ |
11.3 |
$ |
1.03 |
|
|
|
|
|
|
|
|
|
Diluted weighted average common
shares outstanding |
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
9,953 |
|
|
|
|
10,804 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
December 26, 2015 |
|
December 27, 2014 |
|
|
Income |
|
Diluted |
|
Income |
|
Diluted |
|
|
(in millions) |
|
EPS |
|
(in millions) |
|
EPS |
|
|
|
|
|
|
|
|
|
Net earnings, as
reported: |
$ |
|
40.6 |
|
$ |
|
4.04 |
|
$ |
7.1 |
$ |
0.65 |
|
|
|
|
|
|
|
|
|
LIFO (credit) charge,
after tax at statutory federal rate |
$ |
|
(8.6 |
) |
$ |
|
(0.86 |
) |
$ |
7.1 |
$ |
0.64 |
|
|
|
|
|
|
|
|
|
Net earnings, excluding
LIFO impact |
$ |
|
32.0 |
|
$ |
|
3.18 |
|
$ |
14.2 |
$ |
1.29 |
|
|
|
|
|
|
|
|
|
Diluted weighted average common
shares outstanding |
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
9,960 |
|
|
|
|
10,840 |
|
|
|
|
|
|
|
|
|
|
|
Set forth below is a reconciliation of reported net earnings to
EBITDA and FIFO EBITDA (earnings before interest, income taxes,
depreciation, amortization, non-cash charges and credits 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.
|
|
|
|
|
Nine Months Ended |
EBITDA and FIFO
EBITDA: |
|
December 26, 2015 |
|
December 27, 2014 |
|
|
(In thousands) |
Net earnings |
$ |
|
40,613 |
|
$ |
|
7,134 |
|
Income tax expense |
|
|
19,924 |
|
|
|
2,333 |
|
Interest expense, net
of interest income |
|
|
4,894 |
|
|
|
3,917 |
|
Depreciation and
amortization |
|
|
15,884 |
|
|
|
16,495 |
|
Interest
amortization |
|
|
(226 |
) |
|
|
(224 |
) |
EBITDA |
|
|
81,089 |
|
|
|
29,655 |
|
LIFO (credit)
charge |
|
|
(13,249 |
) |
|
|
10,885 |
|
FIFO EBITDA |
$ |
|
67,840 |
|
$ |
|
40,540 |
|
|
|
|
|
|
|
|
|
|
Forward-Looking Information
The information contained in this release
contains, or may contain, forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of
1995. These statements appear in a number of places in this
release and include statements regarding the intent, belief or
current expectations of the Company or its officers (including
statements preceded by, followed by or that include the words
“believes,” “expects,” “anticipates” or similar expressions) with
respect to various matters.
Because such statements are subject to risks and uncertainties,
actual results may differ materially from those expressed or
implied by such forward-looking statements. Investors are
cautioned not to place undue reliance on such statements, which
speak only as of the date the statements were made. Among the
factors that could cause actual results to differ materially
are:
- general economic and business conditions;
- cost and availability of commodities and other raw materials
such as vegetables, steel and packaging materials;
- transportation costs;
- climate and weather affecting growing conditions and crop
yields;
- availability of financing;
- leverage and the Company’s ability to service and reduce its
debt;
- foreign currency exchange and interest rate fluctuations;
- effectiveness of the Company’s marketing and trade promotion
programs;
- changing consumer preferences;
- competition;
- product liability claims;
- the loss of significant customers or a substantial reduction in
orders from these customers;
- changes in, or the failure or inability to comply with, United
States, foreign and local governmental regulations, including
environmental and health and safety regulations; and
- other risks detailed from time to time in the reports filed by
the Company with the SEC.
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.
|
|
|
Seneca Foods Corporation |
|
|
Unaudited Condensed Consolidated Statements of Net
Earnings |
|
|
For the Periods Ended December 26, 2015 and December
27, 2014 |
|
|
(In thousands of dollars, except share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter |
|
Year-to-Date |
|
|
|
|
Fiscal 2016 |
|
Fiscal 2015 |
|
Fiscal 2016 |
|
Fiscal 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
|
432,198 |
|
$ |
|
456,207 |
|
$ |
|
971,658 |
|
$ |
|
1,008,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant restructuring
expense (note 2) |
$ |
|
(9,624 |
) |
$ |
|
(889 |
) |
$ |
|
(9,558 |
) |
$ |
|
(889 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating income
net (note 3) |
$ |
|
24,197 |
|
$ |
|
5,033 |
|
$ |
|
24,600 |
|
$ |
|
4,839 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (note
1) |
$ |
|
48,191 |
|
$ |
|
11,469 |
|
$ |
|
65,563 |
|
$ |
|
13,153 |
|
|
|
Loss (earnings) from
equity investment |
|
|
46 |
|
|
|
55 |
|
|
|
132 |
|
|
|
(231 |
) |
|
|
Interest expense,
net |
|
|
1,932 |
|
|
|
1,431 |
|
|
|
4,894 |
|
|
|
3,917 |
|
|
|
Earnings before income
taxes |
$ |
|
46,213 |
|
$ |
|
9,983 |
|
$ |
|
60,537 |
|
$ |
|
9,467 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
expense |
|
|
15,090 |
|
|
|
2,164 |
|
|
|
19,924 |
|
|
|
2,333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
$ |
|
31,123 |
|
$ |
|
7,819 |
|
$ |
|
40,613 |
|
$ |
|
7,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings attributable
to common stock (note 4) |
$ |
|
30,832 |
|
$ |
|
7,711 |
|
$ |
|
40,180 |
|
$ |
|
6,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share |
$ |
|
3.12 |
|
$ |
|
0.72 |
|
$ |
|
4.06 |
|
$ |
|
0.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share |
$ |
|
3.10 |
|
$ |
|
0.71 |
|
$ |
|
4.04 |
|
$ |
|
0.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding basic |
|
|
9,884,024 |
|
|
|
10,733,113 |
|
|
|
9,891,160 |
|
|
|
10,769,124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding diluted |
|
|
9,953,784 |
|
|
|
10,804,615 |
|
|
|
9,960,920 |
|
|
|
10,840,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 1:
The effect of the LIFO inventory valuation method on third
quarter pre-tax results was to increase operating earnings by
$11,662,000 for the three month period ended December 26, 2015
and decrease operating earnings by $5,315,000 for the three month
period ended December 27, 2014. The effect of the
LIFO inventory valuation method on year-to-date pre-tax results was
to increase operating earnings by $13,249,000 for the nine
month period ended December 26, 2015 and decrease operating
earnings by $10,885,000 for the nine month period ended
December 27, 2014. |
|
Note 2:
The nine month period ended December 26, 2015 included a
restructuring charge for plant closure costs of
$9,558,000. The nine month period ended December 27, 2014
included a restructuring charge for product rationalization costs
of $889,000. |
|
Note 3:
Other operating income for the nine month period ended December 26,
2015 of $24,600,000 represents a $24,275,000 assignment credit
related to the relationship transfer agreement among General
Mills, B & G Foods and the Company, a $200,000 credit related
to a contingency accrual for Prop 65, net gain on the sale
of unused fixed assets of $43,000 and a credit of $82,000
related to an adjustment to an environmental accrual. Other
net gain for the nine month period ended December 27, 2014 of
$4,839,000 represents a $5,000,000 gain related to a third party
payment for the closing of a Midwest plant, a $250,000 charge
related to environmental accrual and net gain on the sale of
unused fixed assets of $89,000. |
|
Note 4:
The Company uses the "two-class" method for basic earnings per
share by dividing the earnings attributable to common
shareholders by the weighted average of common shares
outstanding during the period. |
|
|
|
|
Contact:
Timothy J. Benjamin, Chief Financial Officer
315-926-8100
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