Seneca Foods Reports Sales and Earnings for the Quarter and Year Ended March 31, 2019
June 13 2019 - 04:15PM
Seneca Foods Corporation (NASDAQ: SENEA, SENEB) today announced
financial results for the fourth quarter and year ended March 31,
2019.
Highlights (vs. year-ago, year-to-date
results):
- Net sales increased 3.2% to $1,199.6 million.
- Gross margin percentage from continuing operations decreased
from 7.0% to 3.3% as compared to the prior year twelve months. Cost
increases and a $40.5 million LIFO charge all contributed to the
lower gross margin percentage.
- The Company has applied discontinued operations treatment as
related to its Modesto operations.
- Net earnings from discontinued operations increased by $60.8
million as compared to the prior year. Included in the year ended
March 31, 2019 discontinued operations earnings was a $24.2 million
pre-tax non-cash gain as result of the Modesto LIFO layer
liquidation and a pre-tax cash gain of $56.4 million on the sale of
the Modesto plant and equipment.
“Fiscal year 2019 was challenging for a variety of reasons. We
exited some unprofitable business operations and cut future costs
with strategic plant rationalization. The operating loss from
continuing operations of $38.1 million included a non-cash pre-tax
LIFO charge of $40.5 million. We were able to offset these losses
with gains primarily from the sale of assets. We are looking
forward to an improved year ahead,” stated Kraig Kayser, President
and Chief Executive Officer.
Highlights (vs. year-ago, fourth quarter
results):
- Net sales increased 9.8% to $262.6 million.
- Gross margin percentage from continuing operations decreased
from 7.1% to 5.3% as compared to the prior fourth quarter. Cost
increases contributed to the lower gross margin percentage.
- Net earnings from discontinued operations increased by $14.6
million as compared to the prior fourth quarter.
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 |
|
Year Ended |
|
|
In millions |
|
In millions |
|
|
3/31/2019 |
|
3/31/2018 |
|
3/31/2019 |
|
3/31/2018 |
|
|
FY 2019 |
|
FY 2018 |
|
FY 2019 |
|
FY 2018 |
|
|
|
|
|
|
|
|
|
Operating (loss) income from Continuing Operations, as
reported: |
$ |
(9.6 |
) |
$ |
2.4 |
|
$ |
(38.1 |
) |
$ |
14.8 |
|
|
|
|
|
|
|
|
|
|
LIFO charge (credit) |
|
0.6 |
|
|
(6.7 |
) |
|
40.5 |
|
|
13.0 |
|
|
|
|
|
|
|
|
|
|
Plant restructuring charge
(credit) |
|
9.4 |
|
|
(0.5 |
) |
|
11.7 |
|
|
(0.3 |
) |
|
|
|
|
|
|
|
|
|
Operating income (loss),
excluding LIFO and plant restructuring impact |
$ |
0.4 |
|
$ |
(4.8 |
) |
$ |
14.1 |
|
$ |
27.5 |
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
Twelve Months Ended |
EBITDA and FIFO EBITDA: |
|
March 31, 2019 |
|
March 31, 2018 |
|
|
(In thousands) |
|
|
|
|
|
Net (loss) earnings from continuing operations |
$ |
(36,483 |
) |
$ |
10,049 |
|
Income tax benefit |
|
(12,776 |
) |
|
(1,315 |
) |
Interest expense, net of
interest income |
|
15,437 |
|
|
12,818 |
|
Depreciation and
amortization |
|
29,933 |
|
|
29,452 |
|
Interest amortization |
|
(283 |
) |
|
(284 |
) |
EBITDA |
|
(4,172 |
) |
|
50,720 |
|
LIFO charge |
|
40,548 |
|
|
13,049 |
|
FIFO EBITDA |
$ |
36,376 |
|
$ |
63,769 |
|
|
|
|
|
|
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 March 31, 2019 and 2018 |
(In thousands of dollars, except share data) |
|
|
|
|
|
|
|
|
|
Fourth Quarter |
|
Year-to-Date |
|
Fiscal 2019 |
|
Fiscal 2018 |
|
Fiscal 2019 |
|
Fiscal 2018 |
|
|
|
|
|
|
|
|
Net sales |
$ |
262,590 |
|
|
$ |
239,161 |
|
|
$ |
1,199,581 |
|
|
$ |
1,162,894 |
|
|
|
|
|
|
|
|
|
Plant restructuring charge
(credit) (note 2) |
$ |
9,378 |
|
|
$ |
(499 |
) |
|
$ |
11,657 |
|
|
$ |
(342 |
) |
|
|
|
|
|
|
|
|
Other operating income, net
(note 3) |
$ |
3,133 |
|
|
$ |
1,056 |
|
|
$ |
6,631 |
|
|
$ |
3,671 |
|
|
|
|
|
|
|
|
|
Operating (loss) income (note
1) |
$ |
(9,566 |
) |
|
$ |
2,407 |
|
|
$ |
(38,079 |
) |
|
$ |
14,831 |
|
Earnings from equity
investment |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(21 |
) |
Other income |
|
(1,608 |
) |
|
|
(2,106 |
) |
|
|
(4,257 |
) |
|
|
(6,700 |
) |
Interest expense, net |
|
3,850 |
|
|
|
3,765 |
|
|
|
15,437 |
|
|
|
12,818 |
|
(Loss) earnings from continuing operations before income taxes |
$ |
(11,808 |
) |
|
$ |
748 |
|
|
$ |
(49,259 |
) |
|
$ |
8,734 |
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense |
|
(3,159 |
) |
|
|
395 |
|
|
|
(12,776 |
) |
|
|
(1,315 |
) |
|
|
|
|
|
|
|
|
(Loss) earnings from continuing operations |
|
(8,649 |
) |
|
|
353 |
|
|
|
(36,483 |
) |
|
|
10,049 |
|
Earnings (loss) from discontinued operations (net of tax) |
|
19 |
|
|
|
(14,620 |
) |
|
|
42,230 |
|
|
|
(18,529 |
) |
Net (loss) earnings |
$ |
(8,630 |
) |
|
$ |
(14,267 |
) |
|
$ |
5,747 |
|
|
$ |
(8,480 |
) |
|
|
|
|
|
|
|
|
Basic (loss) earnings
per share: |
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.91 |
) |
|
$ |
0.04 |
|
|
$ |
(3.77 |
) |
|
$ |
1.02 |
|
Discontinued operations |
|
0.00 |
|
|
|
(1.50 |
) |
|
|
4.36 |
|
|
|
(1.89 |
) |
Net basic earnings (loss) per common share |
|
(0.90 |
) |
|
|
(1.46 |
) |
|
|
0.59 |
|
|
|
(0.87 |
) |
|
|
|
|
|
|
|
|
Diluted (loss) earnings
per share: |
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.91 |
) |
|
$ |
0.04 |
|
|
$ |
(3.77 |
) |
|
$ |
1.02 |
|
Discontinued operations |
|
0.00 |
|
|
|
(1.50 |
) |
|
|
4.33 |
|
|
|
(1.89 |
) |
Net diluted earnings (loss) per common share |
|
(0.90 |
) |
|
|
(1.46 |
) |
|
|
0.59 |
|
|
|
(0.87 |
) |
Note 1: |
The effect of the LIFO inventory valuation method on fourth quarter
pre-tax results decreased continuing operating earnings by $615,000
for the three month period ended March 31, 2019 and increased
continuing operating earnings by $6,714,000 for the three month
period ended March 31, 2018. |
|
The effect of the LIFO inventory valuation method on annual pre-tax
results decreased continuing operating earnings by $40,548,000 for
the year ended March 31, 2019 and decreased continuing operating
earnings by $13,049,000 for the year ended March 31, 2018. |
Note 2: |
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 will be ceasing production after this growing
season. This also included $3,832,000 in restructuring
charges. The year ended March 31, 2018 included a restructuring
credit primarily for closing plants in the Midwest and Northwest of
$342,000. |
Note 3: |
During the year ended March 31, 2019, the Company sold unused fixed
assets which resulted in a gain of $6,631,000 as compared to a gain
of $3,671,000 during the year ended March 31, 2018. The current
year gain was mostly related to the sale of a closed plant in the
Northwest of $4,060,000. $1,081,000 of the prior year gain was
related to the sale of a closed plant in the Midwest. In
addition, the Company recorded a bargain purchase gain of
$1,786,000 during the year ended March 31, 2018. |
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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