Seneca Foods Reports Sales and Earnings for the Quarter and Six Months Ended September 28, 2019
November 06 2019 - 4:15PM
Seneca Foods Corporation (NASDAQ: SENEA, SENEB) today announced
financial results for the second quarter and six months ended
September 28, 2019.
Highlights (vs. year-ago, second quarter
results)
- Net continuing sales increased $49.3 million or 15.4% as
compared to the prior year quarter. An increase in sales
volume of $25.7 million and by higher selling prices/sales mix of
$23.6 million. The sales volume increase is primarily from an
increase in B&G Foods Inc. sales and an increase in canned
vegetable sales.
- Gross margin percentage from continuing operations income
increased from 3.4% to 6.5% as compared to the prior year
quarter. Higher sales volume, lower cost increases and a
decrease in the LIFO charge all contributed to the higher gross
margin percentage.
“Our financials continue to show improvement compared to the
prior year. I am pleased with our year-to-date results
and that our restructuring efforts from the prior year are having a
favorable impact,” stated Kraig Kayser, President and Chief
Executive Officer.
Highlights (vs. year-ago, year-to-date
results)
- Net continuing sales increased $70.2 million or 12.4% during
the first six months of fiscal 2020. An increase in sales
volume of $36.2 million and by higher selling prices/sales mix of
$34.0 million. The sales volume increase is primarily
from an increase in canned vegetable sales and an increase in
B&G Foods Inc. sales.
- Gross margin percentage from continuing operations income
increased from 4.9% to 6.8% as compared to the prior year first six
months. Higher sales volume, lower cost increases and a
decrease in the LIFO charge all contributed to the higher gross
margin percentage.
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®, Paradise®, 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 income (loss) excluding LIFO and plant restructuring.
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Quarter Ended |
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Six Months Ended |
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In millions |
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In millions |
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9/28/2019 |
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9/29/2018 |
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9/28/2019 |
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9/29/2018 |
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FY 2020 |
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FY 2019 |
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FY 2020 |
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FY 2019 |
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Operating income (loss) from
continuing operations, as reported: |
$ |
7.4 |
$ |
(4.8 |
) |
$ |
10.3 |
$ |
(4.9 |
) |
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LIFO charge |
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0.7 |
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14.7 |
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3.9 |
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14.2 |
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Plant restructuring
charge |
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1.1 |
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0.8 |
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6.0 |
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0.9 |
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Operating income, excluding
LIFO and plant restructuring impact |
$ |
9.2 |
$ |
10.7 |
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$ |
20.2 |
$ |
10.2 |
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Set forth below is a reconciliation of reported net earnings
(loss) to EBITDA and FIFO EBITDA earnings (loss) 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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Six Months Ended |
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EBITDA and FIFO EBITDA: |
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September 28, 2019 |
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September 29, 2018 |
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(In thousands) |
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Net earnings (loss) from continuing operations |
$ |
5,738 |
|
$ |
(7,794 |
) |
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Income tax expense
(benefit) |
|
1,704 |
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(2,743 |
) |
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Interest expense, net of
interest income |
|
6,493 |
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|
7,723 |
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Depreciation and
amortization |
|
14,698 |
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|
16,086 |
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Interest amortization |
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(139 |
) |
|
(142 |
) |
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EBITDA |
|
28,494 |
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|
13,130 |
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LIFO charge |
|
3,880 |
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|
14,157 |
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FIFO EBITDA |
$ |
32,374 |
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$ |
27,287 |
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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
Seneca Foods Corporation |
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Unaudited Selected Financial Data |
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For the Periods Ended September 28, 2019 and September 29,
2018 |
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(In thousands of dollars, except share data) |
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Second Quarter |
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Year-to-Date |
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Fiscal 2020 |
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Fiscal 2019 |
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Fiscal 2020 |
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Fiscal 2019 |
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Net sales |
$ |
370,002 |
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$ |
320,660 |
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$ |
634,927 |
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$ |
564,753 |
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Plant restructuring expense
(note 2) |
$ |
1,146 |
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$ |
845 |
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$ |
5,952 |
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$ |
883 |
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Other operating income, net
(note 3) |
$ |
2,174 |
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$ |
3,359 |
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$ |
7,001 |
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$ |
4,274 |
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Operating income (loss) (note
1) |
$ |
7,391 |
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|
$ |
(4,833 |
) |
|
$ |
10,328 |
|
|
$ |
(4,856 |
) |
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Other income |
|
(1,804 |
) |
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|
(1,022 |
) |
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(3,607 |
) |
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|
(2,042 |
) |
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Interest expense, net |
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3,141 |
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|
3,898 |
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6,493 |
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7,723 |
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Earnings (loss) from
continuing operations before income taxes |
$ |
6,054 |
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|
$ |
(7,709 |
) |
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$ |
7,442 |
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$ |
(10,537 |
) |
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Income tax expense
(benefit) |
|
1,419 |
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(2,075 |
) |
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|
1,704 |
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(2,743 |
) |
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Earnings (loss) from
continuting operations |
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4,635 |
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(5,634 |
) |
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|
5,738 |
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(7,794 |
) |
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Earnings from discontinued
operations (net of tax) |
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- |
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14,750 |
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- |
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8,155 |
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Net earnings |
$ |
4,635 |
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|
$ |
9,116 |
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$ |
5,738 |
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$ |
361 |
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Basic earnings (loss)
per share: |
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Continuing
operations |
$ |
0.50 |
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|
$ |
(0.58 |
) |
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$ |
0.61 |
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$ |
(0.80 |
) |
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Discontinued
operations |
$ |
- |
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|
$ |
1.51 |
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$ |
- |
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$ |
0.83 |
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Net basic earnings (loss) per
common share |
$ |
0.50 |
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$ |
0.93 |
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$ |
0.61 |
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$ |
0.03 |
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Diluted earnings (loss)
per share: |
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Continuing
operations |
$ |
0.49 |
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|
$ |
(0.58 |
) |
|
$ |
0.61 |
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|
$ |
(0.80 |
) |
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Discontinued
operations |
$ |
- |
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|
$ |
1.50 |
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$ |
- |
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$ |
0.83 |
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Net diluted earnings (loss)
per common share |
$ |
0.49 |
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|
$ |
0.92 |
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$ |
0.61 |
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$ |
0.03 |
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Note
1: |
The effect of
the LIFO inventory valuation method on second quarter pre-tax
results decreased continuing operating earnings by $704,000
for the three month period ended September 28, 2019 and decreased
operating earnings by $14,661,000 for the three month period
ended September 29, 2018. |
|
The effect of
the LIFO inventory valuation method on second quarter pre-tax
results decreased continuing operating earnings by $3,880,000
for the six month period ended September 28, 2019 and decreased
operating earnings by $14,157,000 for the six month period ended
September 29, 2018. |
Note 2: |
The six month period ended September 28, 2019 included a
restructuring charge of $5,952,000 primarily for lease
impairments (including accelerated amortization of $4,475,000)
and equipment moves for plants in the Midwest and Northwest. The
six month period ended September 29, 2018 included a
restructuring charge primarily for severance of $883,000 related to
plants in the East and Northwest. |
Note 3: |
Other operating income for the six months ended September 28,
2019 of $7,001,000 includes a gain on the partial sale of a plant
in the Midwest of $3,742,000 and a gain on the sale of unused
fixed assets of $3,259,000. Other operating income for the six
months ended September 29, 2018 of $4,274,000 includes a gain
on the sale of unused fixed assets of $4,060,000. |
Note 4: |
The Company uses the "two-class" method for basic earnings
(loss) per share by dividing the earnings (loss) attributable
to common shareholders by the weighted average of common
shares outstanding during the period. |
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