Seneca Foods Reports a Sales Increase of 10.9% or $27.6 Million for the Three Months Ended July 1, 2017
July 31 2017 - 4:15PM
Seneca Foods Corporation (NASDAQ:SENEA) (NASDAQ:SENEB) today
announced financial results for the first quarter ended July 1,
2017.
Highlights (vs. year-ago, first quarter
results):
- Net sales increased $27.6 million, or 10.9% to $280.2
million.
- The increase in sales attributed to a favorable sales volume
variance of $28.6 million less an unfavorable sales mix and lower
selling price variance of $(1.0) million.
- The volume increase is in part attributable to the Truitt
Bros., Inc. acquisition which contributed $21.7 million in net
sales.
- Net earnings decreased to a loss of $(0.8) million or $(0.09)
per diluted share.
“We started the new fiscal year as we
expected. First quarter FIFO earnings and net sales are both
up compared to the prior year. We are also pleased that we
were able to complete the acquisition of Truitt Bros. during the
quarter. Our performance will continue to be challenged by an
anticipated large LIFO charge due to higher input costs over the
remainder of the fiscal year," stated Kraig Kayser, President and
Chief Executive Officer.
Financial Results for the First Quarter of
2018
The Company reported a net loss for the fiscal
first quarter of 2018 of $(0.8) million, or $(0.09) per diluted
share, compared to a net loss of $(0.1) million, or $(0.01) per
diluted share, in the fiscal first quarter of 2017. Net
sales for the first quarter ended July 1, 2017, increased from the
first quarter ended July 2, 2016, by 10.9%, to $280.2
million. The increase is attributable to increased sales
volume of $28.6 million partially offset by lower selling
prices/less favorable sales mix of $1.0 million. The volume
increase is in part attributable to the Truitt Bros., Inc.
acquisition which contributed $21.7 million in net sales.
Operating earnings, excluding LIFO and plant
restructuring impact, was $8.3 million and $4.7 million for the
quarter ended July 1, 2017 and July 2, 2016, respectively. A
reconciliation of reported operating income to operating earnings
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®, Aunt Nellie’s®, Green Valley®, 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 |
|
|
In millions |
|
|
7/1/2017 |
|
7/2/2016 |
|
|
FY 2018 |
|
FY 2017 |
|
|
|
|
|
Operating earnings, as
reported: |
$ |
0.8 |
$ |
1.6 |
|
|
|
|
|
LIFO charge |
|
7.4 |
|
1.9 |
|
|
|
|
|
Plant restructuring
charge |
|
0.1 |
|
1.2 |
|
|
|
|
|
Operating earnings,
excluding LIFO and plant restructuring impact |
$ |
8.3 |
$ |
4.7 |
|
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.
|
|
Quarter Ended |
EBITDA and FIFO
EBITDA: |
|
July 1, 2017 |
|
July 2, 2016 |
|
(In thousands) |
Net loss |
$ |
(839 |
) |
$ |
(62 |
) |
Income tax benefit |
|
(1,519 |
) |
|
(48 |
) |
Interest expense, net
of interest income |
|
3,217 |
|
|
2,144 |
|
Depreciation and
amortization |
|
7,748 |
|
|
5,911 |
|
Interest
amortization |
|
(71 |
) |
|
(85 |
) |
EBITDA |
|
8,536 |
|
|
7,860 |
|
LIFO charge |
|
7,443 |
|
|
1,899 |
|
FIFO EBITDA |
$ |
15,979 |
|
$ |
9,759 |
|
|
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 July 1, 2017 and July 2,
2016 |
|
|
(In thousands of dollars, except share data) |
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
|
|
Fiscal 2018 |
|
Fiscal 2017 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
280,187 |
|
$ |
252,614 |
|
|
|
|
|
|
|
|
|
|
Plant restructuring
expense (note 2) |
$ |
81 |
|
$ |
1,185 |
|
|
|
|
|
|
|
|
|
|
Other operating income,
net (note 3) |
$ |
2,612 |
|
$ |
12 |
|
|
|
|
|
|
|
|
|
|
Operating income (note
1) |
$ |
838 |
|
$ |
1,597 |
|
|
|
Earnings from equity
investment |
|
(21 |
) |
|
(437 |
) |
|
|
Interest expense,
net |
|
3,217 |
|
|
2,144 |
|
|
|
Loss before income
taxes |
$ |
(2,358 |
) |
$ |
(110 |
) |
|
|
|
|
|
|
|
|
|
Income tax benefit |
|
(1,519 |
) |
|
(48 |
) |
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(839 |
) |
$ |
(62 |
) |
|
|
|
|
|
|
|
|
|
Loss attributable to
common stock (note 4) |
$ |
(839 |
) |
$ |
(67 |
) |
|
|
|
|
|
|
|
|
|
Basic loss per
share |
$ |
(0.09 |
) |
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
Diluted loss per
share |
$ |
(0.09 |
) |
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding basic |
|
9,814,017 |
|
|
9,808,026 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding diluted |
|
9,884,031 |
|
|
9,878,431 |
|
|
|
|
|
|
|
|
|
|
Note 1: The
effect of the LIFO inventory valuation method on first
quarter pre-tax results decreased operating earnings by $7,443,000
for |
|
the three
month period ended July 1, 2017 and decreased operating earnings by
$1,899,000 for the three month period ended July |
|
2,
2016. |
|
Note 2: The
three month period ended July 1, 2017 included a restructuring
charge primarily for severance and moving costs of $81,000. |
|
The three
month period ended July 2, 2016 included a restructuring charge for
a Northwest plant of $1,185,000. |
|
Note 3:
Other gain for the current year of $2,612,000 includes the bargain
purchase gain on the Truitt acquisition of $1,096,000, a gain on
the |
|
sale of a
Midwest plant of $1,081,000 and net gain on the sale of other
unused fixed assets of $435,000. |
|
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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