Seneca Foods Corporation (NASDAQ:SENEA) (NASDAQ:SENEB) today
announced financial results for the second quarter and six months
ended September 30, 2017.
Highlights (vs. year-ago, second quarter
results):
- Net sales increased $19.1 million, or 5.3% to $376.3
million.
- The increase in sales attributed to a favorable sales volume
variance of $15.9 million and a favorable sales mix and higher
selling price variance of $3.2 million.
- Results for the quarter include the Truitt Bros., Inc.
acquisition which contributed $19.4 million in net
sales.
- Net earnings decreased to a loss of $(1.1) million or $(0.11)
per diluted share.
“Due to a significant LIFO charge for the quarter and six month
periods, we are reporting a slight loss. However, on a
FIFO basis we continue to perform as we expected. FIFO net
earnings and sales are up compared to the prior year.
Overall, operating earnings, excluding LIFO and plant restructuring
charges, are marginally ahead of the prior year,” stated Kraig
Kayser, President and Chief Executive Officer.
Financial Results for the Second Quarter
of 2018
The Company reported a net loss for the fiscal
second quarter of 2018 of $(1.1) million, or $(0.11) per diluted
share, compared to net earnings of $6.1 million, or $0.62 per
diluted share, in the fiscal second quarter of 2017. Net
sales for the second quarter ended September 30, 2017, increased
from the second quarter ended October 1, 2016, by 5.3%, to $376.3
million. The increase is attributable to increased sales
volume of $15.9 million and higher selling prices/more favorable
sales mix of $3.2 million. Results for the quarter include
the Truitt Bros., Inc. acquisition which contributed $19.4 million
in net sales.
Operating earnings, excluding LIFO and plant
restructuring impact, was $12.0 million and $14.0 million for the
quarter ended September 30, 2017 and October 1, 2016,
respectively. A reconciliation of reported operating income
to operating earnings excluding LIFO and plant restructuring
charges is provided below.
Highlights (vs. year-ago, year-to-date
results):
- Net sales increased $46.6 million, or 7.6% to $656.5
million.
- The increase in sales attributed to favorable sales volume
variance of $44.4 million and favorable sales mix and higher
selling price variance of $2.2 million.
- Year-to-date results include the Truitt Bros., Inc. acquisition
which contributed $41.1 million in net sales.
- Net earnings decreased to a loss of $(2.0) million or $(0.20)
per diluted share.
Financial Results for the Fiscal 2018 Six Months
Year-to-Date
During six months ended September 30, 2017, the
Company reported that net loss for the first half of 2018 was
$(2.0) million, or $(0.20) per diluted share, compared to net
earnings of $6.1 million, or $0.61 per diluted share, in the first
half of 2017. Net sales for the first half of fiscal
2018 increased from the first half of fiscal 2017 by 7.6%, to
$656.5 million. The increase is attributable to increased
sales volume of $44.4 million and higher selling prices/more
favorable sales mix of $2.2 million.
Operating earnings, excluding LIFO and plant
restructuring impact, was $20.3 million and $18.6 million for the
six months ended September 30, 2017 and October 1, 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 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 |
|
Six Months Ended |
|
|
In millions |
|
In millions |
|
|
9/30/2017 |
|
10/1/2016 |
|
9/30/2017 |
|
10/1/2016 |
|
|
FY 2018 |
|
FY 2017 |
|
FY 2018 |
|
FY 2017 |
|
|
|
|
|
|
|
|
|
Operating earnings, as
reported: |
$ |
1.6 |
$ |
11.2 |
$ |
2.4 |
$ |
12.8 |
|
|
|
|
|
|
|
|
|
LIFO charge |
|
10.4 |
|
2.5 |
|
17.8 |
|
4.4 |
|
|
|
|
|
|
|
|
|
Plant restructuring
charge |
|
- |
|
0.3 |
|
0.1 |
|
1.4 |
|
|
|
|
|
|
|
|
|
Operating earnings,
excluding LIFO and plant restructuring impact |
$ |
12.0 |
$ |
14.0 |
$ |
20.3 |
$ |
18.6 |
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
EBITDA and FIFO
EBITDA: |
|
September 30, 2017 |
|
October 1, 2016 |
|
|
(In thousands) |
|
|
|
|
|
Net (loss)
earnings |
$ |
(1,951 |
) |
$ |
6,082 |
|
Income tax (benefit)
expense |
|
(2,256 |
) |
|
2,589 |
|
Interest expense, net
of interest income |
|
6,650 |
|
|
4,295 |
|
Depreciation and
amortization |
|
15,349 |
|
|
12,018 |
|
Interest
amortization |
|
(252 |
) |
|
(206 |
) |
EBITDA |
|
17,540 |
|
|
24,778 |
|
LIFO charge |
|
17,841 |
|
|
4,375 |
|
FIFO EBITDA |
$ |
35,381 |
|
$ |
29,153 |
|
|
|
|
|
|
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.
Contact: Timothy J. Benjamin, Chief Financial
Officer315-926-8100
Seneca Foods Corporation |
Unaudited Selected Financial Data |
|
|
|
|
|
|
|
|
For the Periods Ended September 30, 2017 and October
1, 2016 |
(In thousands of dollars, except share data) |
|
|
|
|
|
|
|
|
|
Second Quarter |
|
Year-to-Date |
|
Fiscal 2018 |
|
Fiscal 2017 |
|
Fiscal 2018 |
|
Fiscal 2017 |
|
|
|
|
|
|
|
|
Net sales |
$ |
376,308 |
|
|
$ |
357,247 |
|
|
$ |
656,495 |
|
|
$ |
609,861 |
|
|
|
|
|
|
|
|
|
Plant restructuring
(credit) expense (note 2) |
$ |
(25 |
) |
|
$ |
277 |
|
|
$ |
56 |
|
|
$ |
1,462 |
|
|
|
|
|
|
|
|
|
Other operating income
(expense) net (note 3) |
$ |
20 |
|
|
$ |
(31 |
) |
|
$ |
2,632 |
|
|
$ |
(19 |
) |
|
|
|
|
|
|
|
|
Operating income (note
1) |
$ |
1,584 |
|
|
$ |
11,202 |
|
|
$ |
2,422 |
|
|
$ |
12,799 |
|
Loss (earnings) from
equity investment |
|
- |
|
|
|
270 |
|
|
|
(21 |
) |
|
|
(167 |
) |
Interest expense,
net |
|
3,433 |
|
|
|
2,151 |
|
|
|
6,650 |
|
|
|
4,295 |
|
(Loss) earnings before
income taxes |
$ |
(1,849 |
) |
|
$ |
8,781 |
|
|
$ |
(4,207 |
) |
|
$ |
8,671 |
|
|
|
|
|
|
|
|
|
Income taxes (benefit)
expense |
|
(737 |
) |
|
|
2,637 |
|
|
|
(2,256 |
) |
|
|
2,589 |
|
|
|
|
|
|
|
|
|
Net (loss)
earnings |
$ |
(1,112 |
) |
|
$ |
6,144 |
|
|
$ |
(1,951 |
) |
|
$ |
6,082 |
|
|
|
|
|
|
|
|
|
(Loss) earnings
attributable to common stock (note 4) |
$ |
(1,114 |
) |
|
$ |
6,082 |
|
|
$ |
(1,952 |
) |
|
$ |
6,014 |
|
|
|
|
|
|
|
|
|
Basic (loss) earnings
per share |
$ |
(0.11 |
) |
|
$ |
0.62 |
|
|
$ |
(0.20 |
) |
|
$ |
0.61 |
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings
per share |
$ |
(0.11 |
) |
|
$ |
0.62 |
|
|
$ |
(0.20 |
) |
|
$ |
0.61 |
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding basic |
|
9,791,595 |
|
|
|
9,792,431 |
|
|
|
9,802,806 |
|
|
|
9,800,229 |
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding diluted |
|
9,791,595 |
|
|
|
9,861,865 |
|
|
|
9,802,806 |
|
|
|
9,869,663 |
|
|
|
|
|
|
|
|
|
Note 1:
The effect of the LIFO inventory valuation method on second
quarter pre-tax results decreased operating earnings by $10,398,000
for |
the three month period ended September 30, 2017 and decreased
operating earnings by $2,476,000 for the three month period ended
October |
1, 2016. The effect of the LIFO inventory
valuation method on year-to-date pre-tax results decreased
operating earnings by |
$17,841,000 for the six month period ended September 30, 2017
and decreased operating earnings by $4,375,000 for the six month
period |
ended October 1, 2016. |
Note 2:
The six month period ended September 30, 2017 included a
restructuring charge primarily for moving costs of $56,000. |
The six month period ended October 1, 2016 included a
restructuring charge primarily for moving costs of $1,462,000. |
Note 3:
Other operating income for the six month period ended September 30,
2017 of $2,632,000 represents a net gain on the sale of
unused fixed assets |
of $1,591,000 and a bargain purchase gain of $1,096,000 for
the Truitt Bros. acquisition. |
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. |
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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