Seneca Foods Corporation (NASDAQ:SENEA) (NASDAQ:SENEB) today
announced financial results for the fourth quarter and year ended
March 31, 2017.
Highlights (vs. year-ago, year-to-date
results):
- Net sales decreased 2.3% to $1,245.7 million.
- The decrease in sales attributed to unfavorable sales mix and
lower selling price variance of $86.9 million partially offset by
favorable sales volume variance of $57.2 million.
- The favorable sales volume variance was primarily due to the
Gray acquisition in the third quarter of 2016.
- Net earnings decreased to $12.6 million or $1.27 per diluted
share.
- A significant portion of the net earnings comparative decline
was attributable to a non-recurring gain of $24.3 million in the
prior year.
“Fiscal Year 2017 was a challenging year for us. Our
business faced many of the same top-line issues that are affecting
other consumer packaged food companies as retail shopping habits
are shifting. When coupled with heavier than normal
inventory levels due to good growing conditions, selling prices
declined over the course of the year as the company took steps to
get its inventory levels in line, ” stated Kraig Kayser, President
and Chief Executive Officer.
Financial Results for the Fiscal 2017 Year
Seneca Foods Corporation reported net earnings
for the fiscal year ended March 31, 2017, of $12.6 million, or
$1.27 per diluted share, compared to $54.5 million, or $5.42 per
diluted share, in the fiscal year ended March 31, 2016. A
significant portion of the net earnings decrease was attributable
to a non-recurring pre-tax gain of $24.3 million which occurred in
the prior year.
Net sales for the fiscal year ended March 31,
2017, decreased from the fiscal year ended March 31, 2016 by 2.3%,
to $1,245.7 million. The decrease is attributable to lower
selling prices/less favorable sales mix of $86.9 million partially
offset by increased sales volume of $57.2 million which is
primarily due to the Gray acquisition in the third quarter of
2016.
Operating income was $29.1 million and $88.5
million for the year ended March 31, 2017 and 2016, respectively.
Operating income, excluding the LIFO charge/credit and the
restructuring charge/credit, for the twelve months ended March 31,
2017 and the twelve months ended March 31, 2016, this was $24.9
million and $74.0 million, respectively. A reconciliation of
reported operating income to operating income excluding LIFO and
plant restructuring charges is provided below.
Other operating expense in 2017 was $2.4 million
and mostly included a charge $1.2 million related to costs incurred
due to some roof collapses at a Northwest plant and a charge for an
impairment of a long-term asset of $1.1 million. Other
operating income in 2016 was $25.0 million and mostly included a
gain of $24.3 million related to a contractual payment received in
conjunction with a relationship transfer agreement with General
Mills and a gain of $0.4 million from the sale of other fixed
assets.
Highlights (vs. year-ago, fourth quarter
results):
- Net sales decreased $37.6 million, or 12.4% to $266.1
million.
- The decrease in sales attributed to an unfavorable sales volume
variance of $11.1 million and an unfavorable sales mix and lower
selling price variance of $26.5 million. The volume decline
is in part attributable to the timing of Easter this year versus
the prior year.
- Net earnings decreased to a loss of $(1.7) million or $(0.17)
per diluted share.
Financial Results for the Fourth Quarter
of 2017
The Company reported a net loss for the fiscal
fourth quarter of 2017 was $(1.7) million, or $(0.17) per diluted
share, compared to net earnings of $13.8 million, or $1.38 per
diluted share, in the fiscal fourth quarter of 2016. Net
sales for the fourth quarter ended March 31, 2017, decreased from
the fourth quarter ended March 31, 2016, by 12.4%, to $266.1
million. The decrease is attributable to decreased sales
volume of $11.1 million partially and lower selling prices/less
favorable sales mix of $26.5 million.
Operating income was $2.4 million and $22.1
million for the quarter ended March 31, 2017 and 2016,
respectively. Operating (loss) income, excluding the LIFO
credit/charge and the restructuring charge/credit, was $(5.0)
million for the quarter ended March 31, 2017 and $11.3 million for
the quarter ended March 31, 2016. A reconciliation of
reported operating income to operating income excluding LIFO and
plant restructuring charges is provided below.
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®, CherryMan®, Green Valley®, Aunt
Nellie’s®, READ®, Seneca Farms® and Seneca labels, including Seneca
snack chips. Seneca’s common stock is traded on the Nasdaq
Global Stock Market under the symbols “SENEA” and “SENEB”. SENEA is
included the S&P SmallCap 600, Russell 2000 and Russell 3000
indices.
Non-GAAP Financial Measures—Operating
Income Excluding LIFO and Plant Restructuring Impact, EBITDA and
FIFO EBITDA
Operating income 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 Income excluding LIFO and plant restructuring:
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Quarter Ended |
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Twelve Months Ended |
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In millions |
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In millions |
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3/31/2017 |
|
3/31/2016 |
|
3/31/2017 |
|
3/31/2016 |
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FY 2017 |
|
FY 2016 |
|
FY 2017 |
|
FY 2016 |
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Operating income, as
reported: |
|
$ |
2.4 |
|
$ |
22.1 |
|
$ |
29.1 |
|
$ |
88.5 |
|
|
|
|
|
|
|
|
|
|
|
LIFO credit |
|
|
(6.5 |
) |
|
(11.5 |
) |
|
(6.0 |
) |
|
(24.8 |
) |
|
|
|
|
|
|
|
|
|
|
Plant restructuring
(credit) charge |
|
|
(0.9 |
) |
|
0.7 |
|
|
1.8 |
|
|
10.3 |
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)
income, excluding LIFO and plant restructuring impact |
|
$ |
(5.0 |
) |
$ |
11.3 |
|
$ |
24.9 |
|
$ |
74.0 |
|
|
|
|
|
|
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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, 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.
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|
Year Ended |
EBITDA and FIFO
EBITDA: |
March 31, 2017 |
|
March 31, 2016 |
|
|
|
|
|
|
|
|
|
(In thousands) |
|
|
|
|
Net earnings |
$12,613 |
|
|
$54,458 |
|
Income tax expense |
|
7,414 |
|
|
|
25,999 |
|
Interest expense, net
of interest income |
|
9,672 |
|
|
|
8,044 |
|
Depreciation and
amortization |
|
24,824 |
|
|
|
21,737 |
|
Interest
amortization |
|
(340 |
) |
|
|
(300 |
) |
EBITDA |
|
54,183 |
|
|
|
109,938 |
|
LIFO credit |
|
(6,021 |
) |
|
|
(24,792 |
) |
FIFO EBITDA |
$48,162 |
|
|
$85,146 |
|
|
|
|
|
|
|
|
|
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.
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Seneca Foods Corporation |
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Unaudited Condensed Consolidated Statements of Net
Earnings |
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|
For the Periods Ended March 31, 2017 and 2016 |
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(In thousands of dollars, except share data) |
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Quarter |
|
Year-to-Date |
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|
Fiscal 2017 |
|
Fiscal 2016 |
|
Fiscal 2017 |
|
Fiscal 2016 |
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|
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Net sales |
$ |
266,115 |
|
|
$ |
303,702 |
|
|
$ |
1,245,681 |
|
|
$ |
1,275,360 |
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant restructuring
(credit) expense (note 2) |
$ |
(949 |
) |
|
$ |
744 |
|
|
$ |
1,829 |
|
|
$ |
10,302 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating
(expense) income net (note 3) |
$ |
(1,265 |
) |
|
$ |
371 |
|
|
$ |
(2,437 |
) |
|
$ |
24,971 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (note
1) |
$ |
2,432 |
|
|
$ |
22,108 |
|
|
$ |
29,121 |
|
|
$ |
88,549 |
|
|
|
(Earnings) Loss from
equity investment |
|
(78 |
) |
|
|
(84 |
) |
|
|
(578 |
) |
|
|
48 |
|
|
|
Interest expense,
net |
|
2,963 |
|
|
|
2,272 |
|
|
|
9,672 |
|
|
|
8,044 |
|
|
|
Earnings before income
taxes |
$ |
(453 |
) |
|
$ |
19,920 |
|
|
$ |
20,027 |
|
|
$ |
80,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
expense |
|
1,197 |
|
|
|
6,075 |
|
|
|
7,414 |
|
|
|
25,999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
earnings |
$ |
(1,650 |
) |
|
$ |
13,845 |
|
|
$ |
12,613 |
|
|
$ |
54,458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings
attributable to common stock (note 4) |
|
(1,641 |
) |
|
|
13,712 |
|
|
|
12,475 |
|
|
|
53,891 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings
per share |
$ |
(0.17 |
) |
|
$ |
1.39 |
|
|
$ |
1.27 |
|
|
$ |
5.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Diluted (loss) earnings
per share |
$ |
(0.17 |
) |
|
$ |
1.38 |
|
|
$ |
1.27 |
|
|
$ |
5.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding basic |
|
9,771,116 |
|
|
|
9,839,528 |
|
|
|
9,785,455 |
|
|
|
9,878,252 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding diluted |
|
9,840,945 |
|
|
|
9,909,710 |
|
|
|
9,855,284 |
|
|
|
9,948,434 |
|
|
|
|
|
|
|
|
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Note 1:
The effect of the LIFO inventory valuation method on fourth
quarter pre-tax results increased operating earnings by $6,455,000
for |
|
the three
month period ended March 31, 2017 and increased operating earnings
by $11,543,000 for the three month period ended March |
|
31,
2016. The effect of the LIFO inventory valuation method
on year-to-date pre-tax results increased operating earnings
by |
|
$6,021,000
for the twelve month period ended March 31, 2017 and increased
operating earnings by $24,792,000 for the twelve month period |
|
ended
March 31, 2016. |
|
Note 2:
The twelve month period ended March 31, 2017 included a
restructuring charge primarily for severance and moving costs of
$1,829,000. |
|
The twelve
month period ended March 31, 2016 included a restructuring charge
for plant closure costs of $10,302,000. |
|
Note 3:
Other loss for the twelve month period ended March 31, 2017 of
$2,437,000 represents a charge for $1,160,000 related to some costs
incurred |
|
due to
some roof collapses as a result of heavy snowfall at at Northwest
plant, a charge for impairment of a long-term asset of $1,052,000,
a |
|
net loss
on the sale of unused fixed assets of $177,000 and other
minor items. |
|
Other
operating income for the twelve month period ended March 31, 2016
of $24,971,000 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 $432,000 and a
credit of $64,000 related to an adjustment 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. |
|
|
|
Contact:
Timothy J. Benjamin
315-926-8100
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