Seneca Foods Reports Sales and Earnings for the Quarter and Twelve Months Ended March 31, 2020
July 02 2020 - 4:15PM
Seneca Foods Corporation (NASDAQ: SENEA, SENEB) today announced
financial results for the fourth quarter and twelve months ended
March 31, 2020.
Highlights (vs. year-ago, year-to-date
results):
- Net continuing sales increased
$136.2 million or 11.4% as compared to the prior year twelve
months. This is a result of higher selling prices/sales mix
of $79.5 million and higher sales volume of $56.7 million.
The increase in sales is primarily from a $61.6 million increase in
canned vegetable sales and a $51.6 million increase in B&G
Foods Inc. sales.
- Gross margin percentage from
continuing operations increased from 3.3% to 10.6% as compared to
the prior year twelve months. Higher sales volume, lower cost
increases and a decrease in the LIFO charge all contributed to the
higher gross margin percentage.
“During Fiscal 2020 we completed two years of
restructuring that included plant consolidations, divestitures
including exiting the canned fruit business. As expected, the
Company improved its margins when compared to the prior year.
In addition, we had an unexpected sales lift in the last month of
the fiscal year as consumers pantry loaded as a result of the
coronavirus pandemic,” stated Kraig Kayser, President and Chief
Executive Officer.
Highlights (vs. year-ago, fourth quarter
results):
- Net continuing sales increased
$45.3 million or 17.2% as compared to the prior year quarter.
This is a result of higher selling prices/sales mix of $23.7
million and by higher sales volume of $21.6 million. The
increase in sales is primarily from a $35.4 million increase in
vegetable sales.
- Gross margin percentage from
continuing operations increased from 5.3% to 15.1% as compared to
the prior fourth quarter. 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 From Continuing Operations 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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Twelve Months Ended |
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In millions |
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In millions |
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3/31/2020 |
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3/31/2019 |
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3/31/2020 |
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3/31/2019 |
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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: |
$ |
27.1 |
|
$ |
(9.6) |
|
$ |
70.5 |
|
$ |
(38.1) |
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LIFO (credit) charge |
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(9.6) |
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0.6 |
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(17.1) |
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40.5 |
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Plant restructuring
charge |
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0.3 |
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9.4 |
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7.0 |
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11.7 |
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Operating income, excluding
LIFO and plant restructuring impact |
$ |
17.8 |
|
$ |
0.4 |
|
$ |
60.4 |
|
$ |
14.1 |
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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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Twelve Months Ended |
EBITDA and FIFO EBITDA: |
|
March 31, 2020 |
|
|
March 31, 2019 |
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(In thousands) |
|
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|
|
|
|
Net earnings (loss) from
continuing operations |
$ |
51,188 |
|
$ |
(36,483) |
Income tax expense
(benefit) |
|
14,427 |
|
|
(12,776) |
Interest expense, net of
interest income |
|
11,834 |
|
|
15,437 |
Depreciation and
amortization |
|
30,933 |
|
|
29,933 |
Interest amortization |
|
(279) |
|
|
(283) |
EBITDA |
|
108,103 |
|
|
(4,172) |
LIFO (credit) charge |
|
(17,075) |
|
|
40,548 |
FIFO EBITDA |
$ |
91,028 |
|
$ |
36,376 |
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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;
- potential impact of COVID-19
related issues at our facilities;
- 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 |
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For the Periods Ended March 31, 2020 and 2019 |
(In thousands of dollars, except share data) |
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Fourth 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 |
$ |
307,871 |
|
$ |
262,590 |
|
$ |
1,335,769 |
|
$ |
1,199,581 |
|
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|
|
|
|
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Plant restructuring charge
(note 2) |
$ |
301 |
|
$ |
9,378 |
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$ |
7,046 |
|
$ |
11,657 |
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Other operating income, net
(note 3) |
$ |
4,035 |
|
$ |
3,134 |
|
$ |
12,653 |
|
$ |
6,631 |
|
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|
|
|
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Operating income (loss) (note
1) |
$ |
27,081 |
|
$ |
(9,565) |
|
$ |
70,524 |
|
$ |
(38,079) |
Loss from equity
investment |
93 |
|
- |
|
93 |
|
- |
Other income |
(1,755) |
|
(1,608) |
|
(7,018) |
|
(4,257) |
Interest expense, net |
2,651 |
|
3,850 |
|
11,834 |
|
15,437 |
Earnings (loss) from continuing operations before income taxes |
$ |
26,092 |
|
$ |
(11,807) |
|
$ |
65,615 |
|
$ |
(49,259) |
|
|
|
|
|
|
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Income tax expense
(benefit) |
5,070 |
|
(3,158) |
|
14,427 |
|
(12,776) |
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations |
21,022 |
|
(8,649) |
|
51,188 |
|
(36,483) |
Earnings from discontinued operations (net of tax) |
192 |
|
19 |
|
1,147 |
|
42,230 |
Net earnings (loss) |
$ |
21,214 |
|
$ |
(8,630) |
|
$ |
52,335 |
|
$ |
5,747 |
|
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Basic earnings (loss) per
share: |
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Continuing operations |
$ |
2.29 |
|
$ |
(0.91) |
|
$ |
5.50 |
|
$ |
(3.77) |
Discontinued operations |
$ |
0.02 |
|
$ |
- |
|
$ |
0.12 |
|
$ |
4.36 |
Net basic earnings (loss) per common share |
$ |
2.31 |
|
$ |
(0.91) |
|
$ |
5.62 |
|
$ |
0.59 |
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Diluted earnings (loss) per
share: |
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|
|
|
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Continuing operations |
$ |
2.27 |
|
$ |
(0.91) |
|
$ |
5.46 |
|
$ |
(3.77) |
Discontinued operations |
$ |
0.02 |
|
$ |
- |
|
$ |
0.12 |
|
$ |
4.33 |
Net diluted earnings (loss) per common share |
$ |
2.29 |
|
$ |
(0.91) |
|
$ |
5.58 |
|
$ |
0.59 |
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Note 1: |
The effect of
the LIFO inventory valuation method on fourth quarter pre-tax
results increased continuing operating earnings by $9,618,000
for the three month period ended March 31, 2020 and decreased
continuing operating earnings by $615,000 for the three month
period ended March 31, 2019. The effect of the LIFO inventory
valuation method on annual pre-tax results
increased continuing operating earnings by $17,075,000 for the
year ended March 31, 2020 and decreased continuing operating
earnings by $40,548,000 for the year ended March 31,
2019. |
Note 2: |
The year ended March 31, 2020 includes restructuring charges of
$7,046,000 mostly related to plants in the Midwest and
Northwest. $5,267,000 was of accelerated amortization of
right-of-use operating leases and $2,410,000 was for equipment
moves and $1,875,000 credit for reduced impairment charges and
other charges of $1,244,000 which is mostly severance. The
year ended March 31, 2019 impairment and restructuring charge of
$11,657,000 includes an impairment of $7,825,000 related to a
Northwest plant that ceased production after this growing
season. This also included $3,832,000 in other restructuring
charges, primarily for severance charges. |
Note 3: |
During the year ended March 31, 2020, the Company sold
unused fixed assets which resulted in a gain of $12,653,000 as
compared to a gain of $6,631,000 during the year ended March
31, 2019. The current year gain was mostly related to the sale of a
closed plant in the Northwest of $8,155,000 and the partial
sale of a closed plant in the Midwest of $3,254,0000. The
prior year gain was mostly related to the sale of a closed plant in
the Northwest 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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