Seneca Foods Reports Sales and Earnings for the Nine Months Ended January 1, 2022
February 10 2022 - 3:10PM
Seneca Foods Corporation (NASDAQ: SENEA, SENEB) today announced
financial results for the third quarter and nine months ended
January 1, 2022.
Executive Summary (vs. year-ago, third quarter
results):
- Net sales for the third quarter of fiscal 2022 totaled $445.6
million compared to $484.4 million in the third quarter of fiscal
2021.
- Gross margin as a percentage of net sales for the third quarter
is 10.1% in 2022 as compared to 16.0% in 2021.
Paul Palmby, President and Chief Executive
Officer of Seneca Foods stated, “The Company delivered a solid
performance in the third quarter of fiscal 2022 despite a large
LIFO charge to the quarter and year to date being caused by higher
input costs. Total net sales are down compared to prior year, which
was expected given the 2020 COVID-19 related pantry loading and the
Truitt divesture that happened during fiscal 2021. We remain
focused on mitigating supply chain, labor and inflation related
impacts.”
Executive Summary (vs. year-ago, year-to-date
results):
- Net sales for the nine months ended January 1, 2022 totaled
$1,052.9 million compared to $1,162.9 million for the nine months
ended December 26, 2020.
- Gross margin as a percentage of net sales for the nine months
ended January 1, 2022 is 11.5% as compared to 15.1% for the nine
months ended December 26, 2020.
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
Select 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.
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
January 1, |
|
December 26, |
|
January 1, |
|
December 26, |
|
|
|
2022 |
|
|
|
2020 |
|
|
|
2022 |
|
|
2020 |
|
|
|
|
|
|
|
|
(In thousands) |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
Operating income, as
reported: |
|
$ |
23,664 |
|
|
$ |
90,560 |
|
|
$ |
63,210 |
|
$ |
148,545 |
|
LIFO charge (credit) |
|
|
19,015 |
|
|
|
(4,656 |
) |
|
|
30,654 |
|
|
(4,268 |
) |
Plant restructuring (credit)
charge |
|
|
(110 |
) |
|
|
(118 |
) |
|
|
3 |
|
|
169 |
|
Operating income, excluding
LIFO and plant restructuring impact |
|
$ |
42,569 |
|
|
$ |
85,786 |
|
|
$ |
93,867 |
|
$ |
144,446 |
|
|
|
|
|
|
|
|
|
|
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.
|
|
Nine Months Ended |
|
|
January 1, |
|
December 26, |
EBITDA and FIFO EBITDA: |
|
|
2022 |
|
|
|
2020 |
|
|
|
(In thousands) |
|
|
|
|
|
Net earnings |
|
$ |
44,454 |
|
|
$ |
111,271 |
|
Income tax expense |
|
|
13,767 |
|
|
|
29,479 |
|
Interest expense, net of
interest income |
|
|
4,183 |
|
|
|
4,586 |
|
Depreciation and
amortization |
|
|
27,048 |
|
|
|
24,302 |
|
Interest amortization |
|
|
(181 |
) |
|
|
(206 |
) |
EBITDA |
|
|
89,271 |
|
|
|
169,432 |
|
LIFO charge (credit) |
|
|
30,654 |
|
|
|
(4,268 |
) |
FIFO EBITDA |
|
$ |
119,925 |
|
|
$ |
165,164 |
|
|
|
|
|
|
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;
- the 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;
- an overall labor shortage, lack of skilled labor, labor
inflation or increased turnover impacting the Company’s ability to
recruit and retain employees;
- 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;
- the ability to protect information systems against, or
effectively respond to, a cybersecurity incident or other
disruption;
- changes in, or the failure or inability to comply with, U.S.,
foreign and local governmental regulations, including environmental
and health and safety regulations; and
- other risks discussed elsewhere in this report and the
Company’s other public filings with the Securities and Exchange
Commission.
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 January 1, 2022 and December 26, 2020 |
(In thousands of dollars, except share data) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
January 1, |
|
December 26, |
|
January 1, |
|
December 26, |
|
|
2022 |
|
|
|
2020 |
|
|
|
2022 |
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
445,593 |
|
|
$ |
484,392 |
|
|
$ |
1,052,891 |
|
|
$ |
1,162,851 |
|
|
|
|
|
|
|
|
|
Plant restructuring (credit)
charge (note 2) |
$ |
(110 |
) |
|
$ |
(118 |
) |
|
$ |
3 |
|
|
$ |
169 |
|
|
|
|
|
|
|
|
|
Other operating loss (income)
, net (note 3) |
$ |
399 |
|
|
$ |
(35,351 |
) |
|
$ |
681 |
|
|
$ |
(33,716 |
) |
|
|
|
|
|
|
|
|
Operating income (note 1) |
$ |
23,664 |
|
|
$ |
90,560 |
|
|
$ |
63,210 |
|
|
$ |
148,545 |
|
(Income) loss from equity
investment |
|
- |
|
|
|
(728 |
) |
|
|
7,775 |
|
|
|
752 |
|
Other (income) loss |
|
(2,218 |
) |
|
|
(234 |
) |
|
|
(6,969 |
) |
|
|
2,457 |
|
Interest expense, net |
|
1,505 |
|
|
|
1,531 |
|
|
|
4,183 |
|
|
|
4,586 |
|
Earnings before income
taxes |
$ |
24,377 |
|
|
$ |
89,991 |
|
|
$ |
58,221 |
|
|
$ |
140,750 |
|
|
|
|
|
|
|
|
|
Income tax expense |
|
5,713 |
|
|
|
17,531 |
|
|
|
13,767 |
|
|
|
29,479 |
|
|
|
|
|
|
|
|
|
Net earnings |
$ |
18,664 |
|
|
$ |
72,460 |
|
|
$ |
44,454 |
|
|
$ |
111,271 |
|
|
|
|
|
|
|
|
|
Basic earnings per common
share |
$ |
2.16 |
|
|
$ |
7.96 |
|
|
$ |
5.02 |
|
|
$ |
12.18 |
|
Diluted earnings per common
share |
$ |
2.14 |
|
|
$ |
7.90 |
|
|
$ |
4.98 |
|
|
$ |
12.09 |
|
Note
1: |
The effect of the LIFO inventory valuation method on third quarter
pre-tax results decreased operating earnings by $19.0 million and
increased operating earnings by $4.7 million for the three month
periods ended January 1, 2022 and December 26, 2020, respectively.
The effect of the LIFO inventory valuation method on YTD nine month
pre-tax results decreased operating earnings by $30.7 million and
increased operating earnings by $4.3 million for the nine month
periods ended January 1, 2022 and December 26, 2020,
respectively. |
Note 2: |
During the three months and nine
months ended January 1, 2022 and December 26, 2020, the Company
incurred restructuring charges primarily related to plants that
were closed in previous periods, including severance, health care
costs, and lease impairments, amongst other minor charges. |
Note 3: |
During the three months ended
January 1, 2022, the Company recorded a charge of $0.5 million for
various miscellaneous expenses related to properties that are held
for sale. The Company also recorded miscellaneous income of $0.1
million. During the three months ended December 26, 2020, the
Company completed the sale of its prepared foods business to an
unaffiliated buyer who was not a previous customer. The Company
recorded a gain on the sale of the prepared food business of $35.7
million. Additionally, the Company recorded a loss on the sale of
unused fixed assets of $0.3 million. During the nine months ended
January 1, 2022, the Company recorded a charge of $2.4 million for
supplemental early retirement plans and a charge $0.5 million for
various expenses related to properties that are held for sale.
These expenses were partially offset by a gain from the sale of an
aircraft of $1.2 million, a gain of $0.8 million from the sale of a
plant in the Midwest, and a gain from debt forgiveness of $0.5
million on an economic development loan in which the Company met
all required milestones. The Company also recorded miscellaneous
expenses of $0.3 million. On December 18, 2020, the Company
completed the sale of its prepared foods business to an
unaffiliated buyer who was not a previous customer. The Company
recorded a gain on the sale of the prepared food business of $35.7
million. Additionally during the nine months ended December 26,
2020, the Company recorded a loss of $0.4 million on the disposal
of equipment from a sold Northwest plant and a loss on the sale of
unused fixed assets of $0.4 million. The Company also recorded a
charge of $1.2 million for a supplemental early retirement
plan. |
Note 4: |
The Company used the “two-class”
method for basic earnings per share by dividing the earning
attributable to common shareholders by the weighted average of
common shares outstanding during the period. |
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