Seneca Foods Corporation (NASDAQ:SENEA) (NASDAQ:SENEB) today
announced financial results for the third quarter and nine months
ended December 30, 2017.
Highlights (vs. year-ago, third quarter
results):
- Net sales increased $23.0 million, or 6.2% to $392.7
million.
- The increase in sales attributed to favorable sales mix and
higher selling price variance of $34.5 million partially offset by
a sales volume decrease of $11.5 million.
- Results for the quarter include the Truitt Bros., Inc.
acquisition which contributed $28.2 million in net
sales.
- Net earnings decreased to $7.7 million or $0.78 per diluted
share.
- A tax rate change occurred during the quarter which reduced the
tax provision by $3,040,000 due to the recently passed Tax Cut and
Jobs Act.
“Due to a significant LIFO charge for the quarter and nine month
periods, we are reporting slightly lower earnings than the prior
year periods. FIFO net earnings and sales are up compared to
the prior year. Overall, operating earnings, excluding LIFO
and plant restructuring charges, are ahead of the prior year,”
stated Kraig Kayser, President and Chief Executive Officer.
Financial Results for the Third Quarter
of 2018
The Company reported net earnings for the fiscal
third quarter of 2018 of $7.7 million, or $0.78 per diluted share,
compared to net earnings of $8.2 million, or $0.82 per diluted
share, in the fiscal third quarter of 2017. Net sales
for the third quarter ended December 30, 2017, increased from the
third quarter ended December 31, 2016, by 6.2%, to $392.7
million. The increase is attributable to favorable sales mix
and higher selling price variance of $34.5 million partially offset
by a sales volume decrease of $11.5 million.
Results for the quarter include the Truitt Bros., Inc.
acquisition which contributed $28.2 million in net sales.
Operating earnings, excluding LIFO and plant
restructuring impact, was $12.6 million and $11.3 million for the
quarter ended December 30, 2017 and December 31, 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 $69.6 million, or 7.1% to $1,049.2
million.
- The increase in sales attributed to favorable sales volume
variance of $32.9 million and favorable sales mix and higher
selling price variance of $36.7 million.
- Year-to-date results include the Truitt Bros., Inc. acquisition
which contributed $69.4 million in net sales.
- Net earnings decreased to $5.8 million or $0.58 per diluted
share.
Financial Results for the Fiscal 2018 Nine Months
Year-to-Date
During nine months ended December 30, 2017, the
Company reported that net earnings for the nine months of 2018 was
$5.8 million, or $0.58 per diluted share, compared to net earnings
of $14.3 million, or $1.43 per diluted share, in the first nine
months of 2017. Net sales for the first nine months of
fiscal 2018 increased from the first nine months of fiscal 2017 by
7.1%, to $1,049.2 million. The increase is attributable to
increased sales volume of $32.9 million and higher selling
prices/more favorable sales mix of $36.7 million.
Operating earnings, excluding LIFO and plant
restructuring impact, was $32.9 million and $29.1 million for the
nine months ended December 30, 2017 and December 31, 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 contract
packing services mostly through its wholly owned subsidiary Truitt
Bros., Inc. Also, 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 in order to 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, and 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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Quarter Ended |
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Nine Months Ended |
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In millions |
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In millions |
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12/30/2017 |
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12/31/2016 |
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12/30/2017 |
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12/31/2016 |
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FY 2018 |
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FY 2017 |
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FY 2018 |
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FY 2017 |
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Operating income, as
reported: |
$ |
11.5 |
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$ |
13.9 |
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$ |
13.9 |
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$ |
26.7 |
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LIFO charge
(credit) |
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1.0 |
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(3.9 |
) |
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18.8 |
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(0.4 |
) |
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Plant restructuring
charge |
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0.1 |
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1.3 |
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0.2 |
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2.8 |
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Operating income,
excluding LIFO and plant restructuring impact |
$ |
12.6 |
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$ |
11.3 |
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$ |
32.9 |
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$ |
29.1 |
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Nine Months Ended |
EBITDA and FIFO
EBITDA: |
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December 30, 2017 |
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December 31, 2016 |
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(In thousands) |
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Net earnings |
$ |
5,776 |
|
$ |
14,263 |
|
Income tax (benefit)
expense |
|
(2,524 |
) |
|
6,217 |
|
Interest expense, net
of interest income |
|
10,662 |
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|
6,709 |
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Depreciation and
amortization |
|
23,112 |
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18,209 |
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Interest
amortization |
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(214 |
) |
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(270 |
) |
EBITDA |
|
36,812 |
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|
45,128 |
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LIFO charge |
|
18,835 |
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(434 |
) |
FIFO EBITDA |
$ |
55,647 |
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$ |
44,694 |
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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
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Seneca Foods Corporation |
Unaudited Selected Financial Data |
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For the Periods Ended December 30, 2017 and
December 31, 2016 |
(In thousands of dollars, except share
data) |
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Third Quarter |
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Year-to-Date |
|
Fiscal 2018 |
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Fiscal 2017 |
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Fiscal 2018 |
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Fiscal 2017 |
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Net
sales |
$ |
392,714 |
|
|
$ |
369,705 |
|
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$ |
1,049,209 |
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$ |
979,566 |
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Plant
restructuring expense (note 2) |
$ |
101 |
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$ |
1,316 |
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$ |
157 |
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$ |
2,778 |
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Other
operating income (expense) net (note 3) |
$ |
(17 |
) |
|
$ |
(1,153 |
) |
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$ |
2,615 |
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|
$ |
(1,172 |
) |
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Operating
income (note 1) |
$ |
11,471 |
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$ |
13,890 |
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$ |
13,893 |
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|
$ |
26,689 |
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Earnings
from equity investment |
|
- |
|
|
|
(333 |
) |
|
|
(21 |
) |
|
|
(500 |
) |
Interest
expense, net |
|
4,012 |
|
|
|
2,414 |
|
|
|
10,662 |
|
|
|
6,709 |
|
Earnings
before income taxes |
$ |
7,459 |
|
|
$ |
11,809 |
|
|
$ |
3,252 |
|
|
$ |
20,480 |
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Income
taxes (benefit) expense |
|
(268 |
) |
|
|
3,628 |
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(2,524 |
) |
|
|
6,217 |
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Net
earnings |
$ |
7,727 |
|
|
$ |
8,181 |
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$ |
5,776 |
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$ |
14,263 |
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Earnings
attributable to common stock (note 4) |
$ |
7,690 |
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$ |
8,100 |
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$ |
5,730 |
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$ |
14,116 |
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Basic
earnings per common share |
$ |
0.79 |
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|
$ |
0.83 |
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$ |
0.59 |
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$ |
1.44 |
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Diluted
earnings per common share |
$ |
0.78 |
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|
$ |
0.82 |
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|
$ |
0.58 |
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$ |
1.43 |
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Weighted
average shares outstanding basic |
|
9,739,865 |
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|
9,770,245 |
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|
9,781,826 |
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9,790,234 |
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Weighted
average shares outstanding diluted |
|
9,809,255 |
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|
9,839,915 |
|
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|
9,851,216 |
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|
|
9,859,904 |
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Note
1: |
The effect of the LIFO inventory valuation method on
third quarter pre-tax results decreased operating earnings by
$994,000 for the three month period ended December 30, 2017
and increased operating earnings by $3,941,000 for the three month
period ended December 31, 2016. The effect of the LIFO
inventory valuation method on year-to-date pre-tax results
decreased operating earnings by $18,835,000 for the nine month
period ended December 30, 2017 and increased operating earnings by
$434,000 for the nine month period ended December 31,
2016. |
Note
2: |
The nine month period ended December 30, 2017 included a
restructuring charge primarily for severance and moving costs of
$157,000. The nine month period ended December 31, 2016 included a
restructuring charge primarily for severance and moving costs of
$2,778,000. |
Note
3: |
Other operating income for the nine month period ended
December 30, 2017 of $2,615,000 represents a net gain on the sale
of unused fixed assets of $1,590,000 and a bargain purchase
gain of $1,078,000 for the Truitt Bros. acquisition. Other
loss for the nine month period ended December 31, 2016 of
$1,172,000 represents a charge for impairment of a long-term asset
of $1,052,000, a net loss on the sale of unused fixed assets of
$149,000 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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