Seneca Foods Reports Sales and Earnings for the Quarter Ended June 29, 2019
August 07 2019 - 4:15PM
Seneca Foods Corporation (NASDAQ: SENEA, SENEB) today announced
financial results for the first quarter ended June 29, 2019.
Highlights (vs. year-ago, first quarter
results):
- Net sales increased 8.5% to $264.9 million.
- Gross margin percentage from continuing operations increased
from 6.9% to 7.2% as compared to the prior year three months due to
higher selling prices in the first quarter of 2020.
- The Company has applied discontinued operations treatment as
related to its Modesto operations.
- Net loss from discontinued operations was $6.6 million in the
prior quarter.
“During the first quarter, we began to see
improved results from our extensive restructuring undertaken last
year. We expect the improvements to continue as the year
progresses.” stated Kraig Kayser, President and Chief Executive
Officer.
About Seneca Foods
CorporationSeneca Foods is one of North America’s leading
providers 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®, 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
Income (Loss) From Continuing Operations Excluding LIFO and Plant
Restructuring Impact, EBITDA and FIFO EBITDA
Operating income (loss) 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 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
Operating Income (Loss) excluding LIFO and plant restructuring.
|
|
|
Quarter Ended |
|
|
In millions |
|
|
6/29/2019 |
|
6/30/2018 |
|
|
FY 2020 |
|
FY 2019 |
|
|
|
|
|
Operating income from Continuing Operations, as reported: |
$ |
2.9 |
$ |
- |
|
|
|
|
|
|
LIFO charge
(credit) |
3.2 |
|
(0.7 |
) |
|
|
|
|
|
Plant
restructuring charge |
4.8 |
|
- |
|
|
|
|
|
|
Operating income (loss),
excluding LIFO and plant restructuring impact |
$ |
10.9 |
$ |
(0.7 |
) |
|
Set forth below is a reconciliation of reported
net (loss) earnings from continuing operations to EBITDA and FIFO
EBITDA ((loss) 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.
|
|
|
|
|
|
|
Three Months Ended |
EBITDA and FIFO EBITDA: |
|
June 29, 2019 |
|
June 30, 2018 |
|
|
(In thousands) |
|
|
|
|
|
Net earnings (loss) from continuing operations |
$ |
1,103 |
|
$ |
(2,160 |
) |
Income tax expense
(benefit) |
285 |
|
|
(668 |
) |
Interest expense,
net of interest income |
3,352 |
|
|
3,825 |
|
Depreciation and
amortization |
7,382 |
|
|
7,369 |
|
Interest
amortization |
(70 |
) |
|
(71 |
) |
EBITDA |
|
12,052 |
|
|
8,295 |
|
LIFO charge |
3,176 |
|
|
(710 |
) |
FIFO EBITDA |
$ |
15,228 |
|
$ |
7,585 |
|
|
|
|
|
|
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 June 29, 2019 and June 30, 2018 |
(In thousands of dollars, except share data) |
|
|
|
|
|
First Quarter |
|
Fiscal 2020 |
|
Fiscal 2019 |
|
|
|
|
Net sales |
$ |
264,925 |
|
|
$ |
244,093 |
|
|
|
|
|
Plant restructuring expense
(note 2) |
$ |
4,806 |
|
|
$ |
38 |
|
|
|
|
|
Other operating income, net
(note 3) |
$ |
4,827 |
|
|
$ |
915 |
|
|
|
|
|
Operating income (loss) (note
1) |
$ |
2,937 |
|
|
$ |
(23 |
) |
Other income |
|
(1,803 |
) |
|
|
(1,020 |
) |
Interest expense, net |
|
3,352 |
|
|
|
3,825 |
|
Earnings (loss) from continuing operations before income taxes |
$ |
1,388 |
|
|
$ |
(2,828 |
) |
|
|
|
|
Income tax expense
(benefit) |
|
285 |
|
|
|
(668 |
) |
|
|
|
|
Earnings (loss) from continuing operations |
|
1,103 |
|
|
|
(2,160 |
) |
|
|
|
|
Loss from discontinued operations (net of tax) |
|
- |
|
|
|
(6,595 |
) |
|
|
|
|
Net earnings (loss) |
$ |
1,103 |
|
|
$ |
(8,755 |
) |
|
|
|
|
Basic earnings
(loss) per share: |
|
Continuing operations |
$ |
0.12 |
|
|
$ |
(0.22 |
) |
Discontinued operations |
$ |
- |
|
|
$ |
(0.67 |
) |
Net basic earnings (loss) per common share |
$ |
0.12 |
|
|
$ |
(0.90 |
) |
|
|
|
|
Diluted earnings
(loss) per share: |
|
Continuing operations |
$ |
0.12 |
|
|
$ |
(0.22 |
) |
Discontinued operations |
$ |
- |
|
|
$ |
(0.67 |
) |
Net diluted earnings (loss) per common share |
$ |
0.12 |
|
|
$ |
(0.90 |
) |
|
|
|
|
Note 1: The effect
of the LIFO inventory valuation method on first quarter pre-tax
results decreased operating earnings by $3,176,000 for the three
month period ended June 29, 2019 and increased operating earnings
by $710,000 for the three month period ended June 30, 2018. |
Note 2: The three
month period ended June 29, 2019 included a restructuring charge of
$4,806,000 related to closing plants in the Midwest and Northwest
of which $2,245,000 was for accelerated amortization of
right-of-use operating lease assets due to the planned closure of
Sunnyside this Fall, $1,975,000 was mostly related to equipment
moves and $586,000 was related to severance. The three month period
ended June 30, 2018 included a restructuring charge of $38,000
primarily related to closing a plant in the Northwest. |
Note 3: Other
operating income for the period ended June 29, 2019 is a gain on
the partial sale of a plant in the Midwest of $4,075,000. Other
operating income for the for the period ended June 30, 2018 of
$915,000 includes a gain on the sale of unused fixed assets of
$806,000. |
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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