Seneca Foods Reports a Sales Increase of 14.1% or $44.0 Million and a Net Earnings of $6.1 Million for the Quarter Ended Octo...
November 07 2016 - 4:15PM
Seneca Foods Corporation (NASDAQ:SENEA) (NASDAQ:SENEB) reported for
the second quarter of 2017, net earnings of $6.1 million, or $0.62
per diluted share, compared to net earnings of $6.5 million, or
$0.65 per diluted share, in the fiscal second quarter of
2016. Net sales for the second quarter ended October 1,
2016 increased from the second quarter ended September 26, 2015 by
14.1%, or $44.0 million to $357.2 million. The increase is
attributable to a sales volume increase of $87.0 million partially
offset by an unfavorable sales mix and lower selling prices of
$43.0 million.
The Company reported net earnings for the fiscal
six months ended October 1, 2016 of $6.1 million, or $0.61 per
diluted share, compared to net earnings of $9.5 million, or $0.94
per diluted share for the same period in the prior year. In the six
months ended October 1, 2016, net sales increased $70.4 million, or
13.1% to $609.9 million. The increase is attributable to a sales
volume increase of $116.9 million partially offset by unfavorable
sales mix and lower selling prices of $46.5 million.
During the first six months of fiscal 2017, the
Company recorded a restructuring charge of $1.5 million primarily
related to the cost of moving equipment from a plant that was
closed in the prior fiscal year. In addition, during the
first six months of fiscal 2017, the Company incurred a non-cash
after-tax LIFO charge of $2.8 million, compared to a non-cash
after-tax LIFO credit of $1.0 million in the first six months of
fiscal 2016.
Operating income, as reported, was $11.2 million
for the quarter ended October 1, 2016 and $11.8 million for the
quarter ended September 26, 2015. During the six months ended
October 1, 2016 and the six months ended September 26, 2015, this
was $12.8 million and $18.0 million, respectively. Operating
income, excluding the LIFO charge/credit and the restructuring
charge/credit, was $14.0 million for the quarter ended October 1,
2016 and $11.8 million for the quarter ended September 26,
2015. During the six months ended October 1, 2016 and the six
months ended September 26, 2015, this was $18.6 million and $16.3
million, respectively.
About Seneca Foods
CorporationSeneca 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®, Cherryman®, READ®, Seneca
Farms® 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—Operating
Earnings Excluding LIFO and Plant Restructuring Impact, EBITDA and
FIFO EBITDA
Operating earnings excluding LIFO and plant restructuring,
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 or have plant
restructuring 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
Operating Earnings excluding LIFO and plant restructuring.
|
|
|
Quarter Ended |
|
|
Six Months
Ended |
|
|
|
In millions |
|
|
In millions |
|
|
|
10/1/2016 |
|
|
9/26/2015 |
|
|
10/1/2016 |
|
|
9/26/2015 |
|
|
|
FY 2017 |
|
|
FY 2016 |
|
|
FY 2017 |
|
|
FY 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings, as
reported: |
|
$ |
11.2 |
|
$ |
11.7 |
|
$ |
12.8 |
|
$ |
18.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO charge
(credit) |
|
|
2.5 |
|
|
0.1 |
|
|
4.4 |
|
|
(1.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant restructuring
charge (credit) |
|
|
0.3 |
|
|
- |
|
|
1.4 |
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings,
excluding LIFO and plant restructuring impact |
|
$ |
14.0 |
|
$ |
11.8 |
|
$ |
18.6 |
|
$ |
16.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
Six Months
Ended |
EBITDA and FIFO
EBITDA: |
|
October 1,
2016 |
|
September 26,
2015 |
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
6,082 |
|
|
$ |
9,490 |
|
Income tax expense |
|
|
2,589 |
|
|
|
4,834 |
|
Interest expense, net
of interest income |
|
|
4,295 |
|
|
|
3,581 |
|
Depreciation and
amortization |
|
|
12,018 |
|
|
|
10,487 |
|
Interest
amortization |
|
|
(206 |
) |
|
|
(148 |
) |
EBITDA |
|
|
24,778 |
|
|
|
28,244 |
|
LIFO charge
(credit) |
|
|
4,375 |
|
|
|
(1,587 |
) |
FIFO EBITDA |
|
$ |
29,153 |
|
|
$ |
26,657 |
|
|
|
|
|
|
|
|
|
|
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 Selected
Financial Data |
For the Periods Ended
October 1, 2016 and September 26, 2015 |
(In thousands of
dollars, except share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter |
|
Year-to-Date |
|
|
|
Fiscal 2017 |
|
Fiscal 2016 |
|
Fiscal 2017 |
|
Fiscal 2016 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
357,247 |
|
$ |
313,202 |
$ |
609,861 |
|
$ |
539,460 |
|
|
|
|
|
|
|
|
|
|
|
Plant restructuring
expense (credit) (note 2) |
|
$ |
277 |
|
$ |
15 |
$ |
1,462 |
|
$ |
(66 |
) |
|
|
|
|
|
|
|
|
|
|
Other operating
(expense) income net (note 3) |
|
$ |
(31 |
) |
$ |
67 |
$ |
(19 |
) |
$ |
403 |
|
|
|
|
|
|
|
|
|
|
|
Operating income (note
1) |
|
$ |
11,202 |
|
$ |
11,731 |
$ |
12,799 |
|
$ |
17,991 |
|
Loss (earnings) from
equity investment |
|
|
270 |
|
|
86 |
|
(167 |
) |
|
86 |
|
Interest expense,
net |
|
|
2,151 |
|
|
1,889 |
|
4,295 |
|
|
3,581 |
|
Earnings before income
taxes |
|
$ |
8,781 |
|
$ |
9,756 |
$ |
8,671 |
|
$ |
14,324 |
|
|
|
|
|
|
|
|
|
|
|
Income taxes
expense |
|
|
2,637 |
|
|
3,234 |
|
2,589 |
|
|
4,834 |
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
6,144 |
|
$ |
6,522 |
$ |
6,082 |
|
$ |
9,490 |
|
|
|
|
|
|
|
|
|
|
|
Earnings attributable
to common stock (note 4) |
|
$ |
6,082 |
|
$ |
6,456 |
$ |
6,014 |
|
$ |
9,376 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share |
|
$ |
0.62 |
|
$ |
0.65 |
$ |
0.61 |
|
$ |
0.95 |
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share |
|
$ |
0.62 |
|
$ |
0.65 |
$ |
0.62 |
|
$ |
0.94 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding basic |
|
|
9,792,431 |
|
|
9,901,031 |
|
9,800,229 |
|
|
9,894,729 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding diluted |
|
|
9,861,865 |
|
|
9,970,573 |
|
9,869,663 |
|
|
9,964,271 |
|
|
|
|
|
|
|
|
|
|
|
Note 1:
The effect of the LIFO inventory valuation method on second
quarter pre-tax results decreased operating earnings by $2,476,000
for |
the three
month period ended October 1, 2016 and decreased operating earnings
by $50,000 for the three month period ended September |
26,
2015. The effect of the LIFO inventory valuation method
on year-to-date pre-tax results decreased operating earnings
by |
$4,375,000
for the six month period ended October 1, 2016 and increased
operating earnings by $1,587,000 for the six month period |
ended
September 26, 2015. |
Note 2:
The six month period ended October 1, 2016 included a restructuring
charge primarily for moving costs of $1,462,000. |
The six
month period ended September 26, 2015 included a restructuring
credit for product rationalization costs of $66,000. |
Note 3:
Other loss for the six month period ended October 1, 2016 of
$19,000 represents a net loss on the sale of unused fixed
assets |
of $48,000
and a gain of $29,000 to adjust a previously recorded environmental
charge. |
Other gain
for the six month period ended September 26, 2015 of $403,000
represents a $200,000 credit related to a contingency accrual
for |
Prop 65,
net gain on the sale of unused fixed assets of $143,000 and a
credit of $60,000 related to an environmental accrual. |
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. |
|
|
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|
Contact:
Timothy J. Benjamin, Chief Financial Officer
315-926-8100
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