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Seneca Foods Reports Sales and Earnings for the Quarter and Nine Months Ended December 28, 2024

1. Net sales increased 6.5% year-over-year to $1.23 billion for nine months. 2. Gross margin decreased from 14.6% to 10.9% due to poor climate conditions. 3. Third-quarter sales grew 13.1% year-over-year, but margins still pressured. 4. Unit volume sales grew over 16%, indicating consumer demand remains strong. 5. Operating cash flow improved, aiding in debt reduction despite margin compression.

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Why Neutral?

While sales improved, declining margins raise concerns about profitability.

How important is it?

Financial results highlight growth potential but caution on margins is critical.

Why Short Term?

Near-term results suggest fluctuating profits, affecting investor sentiment temporarily.

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SENEB
February 06, 2025 16:15 ET  | Source: Seneca Foods Corp. FAIRPORT, N.Y., Feb. 06, 2025 (GLOBE NEWSWIRE) -- Seneca Foods Corporation (NASDAQ: SENEA, SENEB) today announced financial results for the third quarter and nine months ended December 28, 2024. Executive Summary (vs. year-ago, year-to-date results): Net sales for the nine months ended December 28, 2024 totaled $1,233.0 million compared to $1,150.6 million for the nine months ended December 30, 2023. The year-over-year increase of $82.4 million was due mainly to higher sales volumes.Gross margin as a percentage of net sales is 10.9% for the nine months ended December 28, 2024, as compared to 14.6% for the nine months ended December 30, 2023. “We are pleased with the continued unit volume sales growth experienced in the third quarter, up over 16% compared to last year. However, margins remain pressured versus last year due to the poor 2024 pack season, driven by historic rainy weather in our primary growing areas,” stated Paul Palmby, President and Chief Executive Officer of Seneca Foods. “The short pack combined with robust sales momentum have contributed to significant working capital reductions, strong operating cash flow, and debt paydown in the quarter.” Executive Summary (vs. year-ago, third quarter results): Net sales for the third quarter of fiscal 2025 totaled $502.9 million compared to $444.5 million for the third quarter of fiscal 2024. The year-over-year increase of $58.4 million was driven by higher sales volumes, offset by lower selling prices.Gross margin as a percentage of net sales is 9.8% for the three months ended December 28, 2024, as compared to 12.2% for the three months ended December 30, 2023. 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 more than 1,200 American farms and are distributed to approximately 55 countries. Seneca holds a large share of the market for retail private label, food service, restaurant chains, international, contracting packaging, industrial, chips and cherry products.  Products are also sold under the highly regarded brands of Libby’s®, Green Giant®, 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    Adjusted net earnings excludes the non-cash charges related to the last-in, first-out (LIFO) inventory valuation method, net of applicable income taxes. The Company believes this non-GAAP financial measure provides for a better comparison of year over year 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 earnings before income taxes to adjusted net earnings (in thousands).           Three Months Ended Nine Months Ended  December 28, December 30, December 28, December 30,   2024  2023  2024  2023 Earnings before income taxes, as reported$19,348 $23,199 $52,917 $86,037 LIFO charge 10,919  12,027  22,978  19,643 Adjusted earnings before income taxes 30,267  35,226  75,895  105,680 Income taxes 7,353  8,519  17,901  25,363 Adjusted net earnings$22,914 $26,707 $57,994 $80,317                    Set forth below is a reconciliation of reported net earnings to EBITDA and FIFO EBITDA (earnings before interest, income taxes, depreciation, amortization and non-cash charges 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 (in thousands).  Three Months Ended Nine Months EndedEBITDA and FIFO EBITDA:December 28, December 30, December 28, December 30,  2024   2023   2024   2023 Net earnings$14,659  $17,675  $40,623  $65,565 Income taxes 4,689   5,524   12,294   20,472 Interest expense, net of interest income 7,841   9,388   27,199   23,146 Depreciation and amortization 12,611   12,645   37,573   38,070 Interest amortization (177)  (113)  (408)  (327)EBITDA 39,623   45,119   117,281   146,926 LIFO charge 10,919   12,027   22,978   19,643 FIFO EBITDA$50,542  $57,146  $140,259  $166,569                  Forward-Looking Information This release contains “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they address future events, developments, and results and do not relate strictly to historical facts. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain the words "will," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "seeks," "should," "likely," "targets," "may," "can” and variations thereof and similar expressions. Forward-looking statements are subject to known and unknown risks, uncertainties, and other important factors that could cause actual results to differ materially from those expressed. We believe important factors that could cause actual results to differ materially from our expectations include, but are not limited to, the following: the effects of rising costs and availability of raw fruit and vegetables, steel, ingredients, packaging, other raw materials, distribution and labor;crude oil prices and their impact on distribution, packaging and energy costs;an overall labor shortage, ability to retain a sufficient seasonal workforce, lack of skilled labor, labor inflation or increased turnover impacting our ability to recruit and retain employees;climate and weather affecting growing conditions and crop yields;our ability to successfully implement sales price increases and cost saving measures to offset cost increases;the loss of significant customers or a substantial reduction in orders from these customers;effectiveness of our marketing and trade promotion programs;competition, changes in consumer preferences, demand for our products and local economic and market conditions;the impact of a pandemic on our business, suppliers, customers, consumers and employees;unanticipated expenses, including, without limitation, litigation or legal settlement expenses;product liability claims;the anticipated needs for, and the availability of, cash;the availability of financing;leverage and the ability to service and reduce debt;foreign currency exchange and interest rate fluctuations;the risks associated with the expansion of our business;the ability to successfully integrate acquisitions into our operations;our ability to protect information systems against, or effectively respond to, a cybersecurity incident or other disruption;other factors that affect the food industry generally, including: recalls if products become adulterated or misbranded, liability if product consumption causes injury, ingredient disclosure and labeling laws and regulations and the possibility that consumers could lose confidence in the safety and quality of certain food products;competitors’ pricing practices and promotional spending levels;fluctuations in the level of our customers’ inventories and credit and other business risks related to our customers operating in a challenging economic and competitive environment; andthe risks associated with third-party suppliers, including the risk that any failure by one or more of our third-party suppliers to comply with food safety or other laws and regulations may disrupt our supply of raw materials or certain finished goods products or injure our reputation; and changes in, or the failure or inability to comply with, U.S., foreign and local governmental regulations, including health, environmental, and safety regulations. 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: Michael Wolcott, Chief Financial Officer585-495-4100  Seneca Foods CorporationUnaudited Selected Financial DataFor the Periods Ended December 28, 2024 and December 30, 2023(In thousands of dollars, except share data)         Three Months Ended Nine Months Ended December 28, December 30, December 28, December 30,  2024   2023   2024   2023         Net sales$502,856  $444,481  $1,233,048  $1,150,620         Operating income (note 1) 25,660   30,762   75,782   104,683 Other non-operating income (1,529)  (1,825)  (4,334)  (4,500)Interest expense, net 7,841   9,388   27,199   23,146 Earnings before income taxes$19,348  $23,199  $52,917  $86,037         Income taxes 4,689   5,524   12,294   20,472         Net earnings$14,659  $17,675  $40,623  $65,565         Basic earnings per common share$2.12  $2.47  $5.86  $8.86 Diluted earnings per common share$2.10  $2.45  $5.81  $8.78  Note 1: The effect of the LIFO inventory valuation method on the third quarter pre-tax results decreased operating income by $10.9 million and $12.0 million for the three months ended December 28, 2024 and December 30, 2023, respectively. The effect of the LIFO inventory valuation method on YTD nine month pre-tax results decreased operating income by $23.0 million and $19.6 million for the nine months ended December 28, 2024 and December 30, 2023, respectively.  Note 2: 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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