Seneca Foods Reports Sales and Earnings for the Quarter and Six Months Ended September 26, 2020
November 04 2020 - 4:15PM
Seneca Foods Corporation (NASDAQ: SENEA, SENEB) today announced
financial results for the second quarter and six months ended
September 26, 2020.
Highlights (vs. year-ago,
second quarter
results):
- Net sales increased
5.5% to $390.3 million.
- Gross margin
percentage increased from 6.5% to 12.5% as compared to the prior
year three months due to higher selling prices and higher sales
volume in the second quarter of 2021.
“The second quarter showed solid results when
compared to the prior year. Strong demand driven by our customers
anticipated consumer pantry loading due to COVID-19 continues to
help drive sales and net income.” stated Paul Palmby, President and
Chief Executive Officer.
Highlights (vs. year-ago, year-to-date
results):
- Net sales increased
6.9% to $678.5 million.
- Gross margin
percentage increased from 6.8% to 14.4% as compared to the prior
year year-to-date mostly due to higher selling prices in the first
six months of 2021.
About Seneca Foods
Corporation
Seneca 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 1,600 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. 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 Excluding LIFO and
Plant Restructuring Impact, EBITDA and FIFO EBITDA
Operating income 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 excluding LIFO and plant restructuring.
|
|
Quarter Ended |
|
Year Ended |
|
|
In millions |
|
In millions |
|
|
9/26/2020 |
|
9/28/2019 |
|
9/26/2020 |
|
9/28/2019 |
|
|
FY 2021 |
|
FY 2020 |
|
FY 2021 |
|
FY 2020 |
|
|
|
|
|
|
|
|
|
Operating
income, as reported: |
$ |
27.7 |
$ |
7.4 |
$ |
58.0 |
$ |
10.3 |
|
|
|
|
|
|
|
|
|
LIFO
charge |
|
2.5 |
|
0.7 |
|
0.4 |
|
3.9 |
|
|
|
|
|
|
|
|
|
Plant
restructuring charge |
|
- |
|
1.1 |
|
0.3 |
|
6.0 |
|
|
|
|
|
|
|
|
|
Operating
income, excluding LIFO and plant restructuring impact |
$ |
30.2 |
$ |
9.2 |
$ |
58.7 |
$ |
20.2 |
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.
|
|
Six Months
Ended |
EBITDA and
FIFO EBITDA: |
|
September 26, 2020 |
|
September 28, 2019 |
|
|
(In thousands) |
|
|
|
|
|
Net earnings |
$ |
38,811 |
|
$ |
5,738 |
|
Income tax
expense |
|
11,948 |
|
|
1,704 |
|
Interest
expense, net of interest income |
|
3,055 |
|
|
6,493 |
|
Depreciation
and amortization |
|
16,050 |
|
|
14,698 |
|
Interest
amortization |
|
(137 |
) |
|
(139 |
) |
EBITDA |
|
69,727 |
|
|
28,494 |
|
LIFO
charge |
|
388 |
|
|
3,880 |
|
FIFO
EBITDA |
$ |
70,115 |
|
$ |
32,374 |
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
For the Periods
Ended September 26, 2020 and September 28, 2019 |
(In thousands of
dollars, except share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter |
|
Year-to-Date |
|
Fiscal 2021 |
Fiscal 2020 |
|
Fiscal 2021 |
|
Fiscal 2020 |
|
|
|
|
|
|
|
|
Net sales |
$ |
390,294 |
|
|
$ |
370,002 |
|
|
$ |
678,459 |
|
|
$ |
634,927 |
|
|
|
|
|
|
|
|
|
Plant
restructuring expense (note 2) |
$ |
24 |
|
|
$ |
1,146 |
|
|
$ |
287 |
|
|
$ |
5,952 |
|
|
|
|
|
|
|
|
|
Other
operating (loss) income, net (note 3) |
$ |
(1,780 |
) |
|
$ |
2,174 |
|
|
$ |
(1,635 |
) |
|
$ |
7,001 |
|
|
|
|
|
|
|
|
|
Operating
income (note 1) |
$ |
27,686 |
|
|
$ |
7,391 |
|
|
$ |
57,985 |
|
|
$ |
10,328 |
|
Loss from
equity investment |
|
804 |
|
|
|
- |
|
|
|
1,480 |
|
|
|
- |
|
Other loss
(income) |
|
1,760 |
|
|
|
(1,804 |
) |
|
|
2,691 |
|
|
|
(3,607 |
) |
Interest
expense, net |
|
1,404 |
|
|
|
3,141 |
|
|
|
3,055 |
|
|
|
6,493 |
|
Earnings
before income taxes |
$ |
23,718 |
|
|
$ |
6,054 |
|
|
$ |
50,759 |
|
|
$ |
7,442 |
|
|
|
|
|
|
|
|
|
Income tax
expense |
|
5,613 |
|
|
|
1,419 |
|
|
|
11,948 |
|
|
|
1,704 |
|
|
|
|
|
|
|
|
|
Net
earnings |
$ |
18,105 |
|
|
$ |
4,635 |
|
|
$ |
38,811 |
|
|
$ |
5,738 |
|
|
|
|
|
|
|
|
|
Basic
earnings per share |
$ |
1.98 |
|
|
$ |
0.50 |
|
|
$ |
4.24 |
|
|
$ |
0.61 |
|
|
|
|
|
|
|
|
|
Diluted
earnings per share |
$ |
1.97 |
|
|
$ |
0.49 |
|
|
$ |
4.21 |
|
|
$ |
0.61 |
|
|
|
|
|
|
|
|
|
Note 1: The effect of
the LIFO inventory valuation method on second quarter pre-tax
results decreased operating earnings by |
$2,528,000
for the three month period ended September 26, 2020 and decreased
operating earnings by $704,000 for the |
three
month period ended September 28, 2019. |
|
|
|
|
|
|
|
The
effect of the LIFO inventory valuation method on second quarter
pre-tax results decreased operating earnings by |
$388,000
for the six month period ended September 26, 2020 and decreased
operating earnings by $3,880,000 for the six |
month
period ended September 28, 2019. |
|
|
|
|
|
|
|
Note 2: The six month
period ended September 26, 2020 included a restructuring charge of
$287,000 primarily related to closed |
plants
in the Northwest, of which $219,000 was related to severance and
$44,000 was related to lease impairments. 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. |
|
Note 3: During the six
months ended September 26, 2020, the Company recorded a loss of
$532,000 on the disposal of equipment from |
a
sold Northwest plant and the gain on the sale of unused fixed
assets of $71,000. The Company also recorded a charge of
$1,174,000 |
for
a supplemental early retirement plan. 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. |
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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