Seneca Foods Reports a Sales Increase of 22.4% or $62.7 Million for the Three Months Ended June 30, 2018
July 31 2018 - 4:15PM
Seneca Foods Corporation (NASDAQ: SENEA, SENEB) today announced
financial results for the first quarter ended June 30, 2018.
Highlights (vs. year-ago, first quarter
results):
- Net sales increased $62.7 million, or 22.4% to $343.4
million.
- The increase in sales attributed to a favorable sales volume
variance of $56.8 million and a favorable sales mix and higher
selling price variance of $5.9 million.
- Net earnings decreased to a loss of $(8.8) million or $(0.90)
per diluted share.
- The Company finalized an agreement to sell the majority of its
Modesto fruit inventory to Pacific Coast Producers, Inc. The
completion of the sale of inventory happened during the three
months ended June 30, 2018 and resulted in an increase to net sales
of approximately $55.8 million.
- The loss in the first quarter of fiscal 2019 was largely
attributable to the Modesto fruit business, which the Company is
exiting.
“We were pleased to complete the sale of the canned fruit
inventories to Pacific Coast Producers near the end of the quarter,
we expect to complete the winding up of this business before the
end of the fiscal year," stated Kraig H. Kayser, President and
Chief Executive Officer.
Financial Results for the First Quarter
of 2019
The Company reported a net loss for the fiscal
first quarter of 2019 of $(8.8) million, or $(0.90) per diluted
share, compared to a net loss of $(0.8) million, or $(0.09) per
diluted share, in the fiscal first quarter of 2018. Net
sales for the first quarter ended June 30, 2018, increased from the
first quarter ended July 1, 2017, by 22.4%, to $343.4
million. The increase is attributed to a favorable sales
volume variance of $56.8 million and a favorable sales mix and
higher selling price variance of $5.9 million. The volume
increase is primarily attributable to the Pacific Coast Producers
sale of fruit which contributed $55.8 million to net sales.
Operating (loss) income, excluding LIFO and
plant restructuring impact, was $(6.5) million and $6.9 million for
the quarter ended June 30, 2018 and July 1, 2017,
respectively. A reconciliation of reported operating (loss)
income to operating (loss) income 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 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 Earnings excluding LIFO and plant restructuring.
|
|
|
Quarter Ended |
|
|
In millions |
|
|
6/30/2018 |
|
7/1/2017 |
|
|
FY 2019 |
|
FY 2018 |
|
|
|
|
|
Operating (loss)
income, as reported: |
$ |
(7.8 |
) |
$ |
(0.6 |
) |
|
|
|
|
|
LIFO (credit)
charge |
|
(0.5 |
) |
|
7.4 |
|
|
|
|
|
|
Plant restructuring
charge |
|
1.8 |
|
|
0.1 |
|
|
|
|
|
|
Operating (loss)
income, excluding LIFO and plant restructuring impact |
$ |
(6.5 |
) |
$ |
6.9 |
|
|
Set forth below is a reconciliation of reported net (loss)
earnings 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 30, 2018 |
|
July 1, 2017 |
|
|
(In thousands) |
|
|
|
|
|
Net (loss)
earnings |
$ |
(8,755 |
) |
$ |
(842 |
) |
Income tax (benefit)
expense |
|
(2,511 |
) |
|
(1,519 |
) |
Interest expense, net
of interest income |
|
4,449 |
|
|
3,217 |
|
Depreciation and
amortization |
|
8,046 |
|
|
7,748 |
|
Interest
amortization |
|
(71 |
) |
|
(71 |
) |
EBITDA |
|
1,158 |
|
|
8,533 |
|
LIFO (credit)
charge |
|
(504 |
) |
|
7,443 |
|
FIFO EBITDA |
$ |
654 |
|
$ |
15,976 |
|
|
|
|
|
|
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 30, 2018 and July 1,
2017 |
(In thousands of dollars, except share data) |
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
Fiscal 2019 |
|
Fiscal 2018 |
|
|
|
|
|
|
Net sales |
$ |
342,392 |
|
|
$ |
280,662 |
|
|
|
|
|
|
|
Plant restructuring
expense (note 2) |
$ |
1,820 |
|
|
$ |
81 |
|
|
|
|
|
|
|
Other operating income,
net (note 3) |
$ |
6,553 |
|
|
$ |
2,612 |
|
|
|
|
|
|
|
Operating (loss) income
(note 1) |
$ |
(7,837 |
) |
|
$ |
(632 |
) |
|
Earnings from equity
investment |
|
- |
|
|
|
(21 |
) |
|
Other income |
|
(1,020 |
) |
|
|
(1,467 |
) |
|
Interest expense,
net |
|
4,449 |
|
|
|
3,217 |
|
|
Loss
before income taxes |
$ |
(11,266 |
) |
|
$ |
(2,361 |
) |
|
|
|
|
|
|
Income tax benefit |
|
(2,511 |
) |
|
|
(1,519 |
) |
|
|
|
|
|
|
Net
loss |
$ |
(8,755 |
) |
|
$ |
(842 |
) |
|
|
|
|
|
|
Loss
attributable to common stock (note 4) |
$ |
(8,727 |
) |
|
$ |
(842 |
) |
|
|
|
|
|
|
Basic loss per
share |
$ |
(0.90 |
) |
|
$ |
(0.09 |
) |
|
|
|
|
|
|
Diluted loss per
share |
$ |
(0.90 |
) |
|
$ |
(0.09 |
) |
|
|
|
|
|
|
Weighted average shares
outstanding basic |
|
9,744,472 |
|
|
|
9,814,017 |
|
|
|
|
|
|
|
Weighted average shares
outstanding diluted |
|
9,814,636 |
|
|
|
9,884,031 |
|
|
|
|
|
|
|
Note 1: The
effect of the LIFO inventory valuation method on first
quarter pre-tax results increased operating earnings by $504,000
for |
|
the three month period ended June 30, 2018 and
decreased operating earnings by $7,443,000 for the three month
period ended July |
1, 2017. |
|
|
|
|
Note 2: The
three month period ended June 30, 2018 included a restructuring
charge primarily for severance and asset impairments of |
|
$1,820,000 related to Modesto. The three month
period ended July 1, 2017 included a restructuring charge primarily
for severance |
and moving costs of $81,000. |
|
|
|
|
Note 3:
Other operating income for the period ended June 30, 2018 of
$6,553,000 includes a gain on the sale of unused fixed assets
of |
|
$6,444,000. Other operating income for the
for the period ended July 1, 2017 of $2,612,000 includes the
bargain purchase gain |
|
on the Truitt acquisition of $1,096,000, a gain
on the sale of a Midwest plant of $1,081,000 and net gain on the
sale of other |
|
unused fixed assets of $435,000. |
|
|
|
|
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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