GlobeNewswire Inc | Nov 4, 2020 04:15PM EST

November 04, 2020

MARION, N.Y., Nov. 04, 2020 (GLOBE NEWSWIRE) -- 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 Americas 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 Libbys, Aunt Nellies, Green Valley, CherryMan, READ, and Seneca labels, including Seneca snack chips. Senecas 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 MeasuresOperating 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 Companys 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/ 9/28/ 9/26/ 9/28/ 2020 2019 2020 2019 FY FY FY FY 2021 2020 2021 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 $ 30.2 $ 9.2 $ 58.7 $ 20.2plant restructuring impact

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 EndedEBITDA and FIFO EBITDA: September 26, September 28, 2020 2019 (In thousands) Net earnings $ 38,811 $ 5,738 Income tax expense 11,948 1,704 Interest expense, net of interest 3,055 6,493 incomeDepreciation 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 Companys 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 Companys 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 CorporationUnaudited 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 $ 24 $ 1,146 $ 287 $ 5,952 2) Other operating (loss) income, $ (1,780 ) $ 2,174 $ (1,635 ) $ 7,001 net (note 3) 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 quarterpre-tax results decreased operating earnings by$2,528,000 for the three month period ended September26, 2020 and decreased operating earnings by $704,000 for thethreemonth period ended September 28, 2019.The effect of the LIFO inventory valuation method onsecond 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 sixmonth period ended September 28, 2019.Note 2: The six month period ended September 26, 2020 included a restructuringcharge of $287,000 primarily related to closedplants in the Northwest, of which $219,000 wasrelated to severance and $44,000 was related to lease impairments. The sixmonth period ended September 28, 2019 included arestructuring charge of $5,952,000 primarily for lease impairments (includingaccelerated 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 aloss of $532,000 on the disposal of equipment froma sold Northwest plant and the gain on the sale ofunused fixed assets of $71,000. The Company also recorded a charge of$1,174,000for a supplemental early retirement plan. Otheroperating income for the six months ended September 28, 2019 of $7,001,000includes a gain on the partial sale of a plant in theMidwest 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 bydividing the earnings attributable tocommon shareholders by the weighted average of common shares outstanding during the period.