Company Overview - Seneca Foods Corporation has experienced a significant increase in its share price, rising by 22.9% in recent months [1] Industry Insights - The company operates in the packaged fruits and vegetables sector, providing a range of products to its customers [1]

Core Viewpoint - Seneca Foods Corporation (SENEA) has been upgraded to an "Outperform" rating due to expected volume recovery from a key co-pack customer, benefits from deleveraging reducing interest expenses, and a normalization in gross margins as high-cost inventory dissipates, enhancing its earnings power and market position in packaged fruits and vegetables across North America [1] Volume Recovery - In the first quarter of fiscal 2026, Seneca's sales decreased by 2.4% year over year to $297.5 million, down from $304.7 million, primarily due to shipment disruptions from a key co-pack customer [2] - Management anticipates that these volumes will recover under the existing contractual relationship, providing a near-term boost to revenue as fiscal 2026 progresses [2] - Resilient consumer demand for shelf-stable vegetables and snacks is expected to stabilize revenue momentum [2] Interest Expense Decline - Seneca experienced a significant reduction in interest expense, which fell by 47.7% year over year to $5.4 million from $10.3 million in the first quarter of fiscal 2026, due to aggressive debt paydown and refinancing [3] - Long-term debt has been reduced to $259.5 million, with the revolver refinanced through 2029, positioning the company for continued interest savings over the next several quarters [3] - This deleveraging, along with steady operating cash flow, is expected to provide an uplift in earnings per share (EPS) and enhance balance sheet flexibility [3] Gross Margin Recovery - Gross margin improved to 14.1% in the first quarter of fiscal 2026, up from 14% a year ago, despite challenges from high-cost inventory due to unfavorable weather conditions [4] - Management noted progress in selling through high-cost inventory, with expectations for a normalized growing season in 2025 to ease input pressures and improve gross margin [4] - An $11.8 million LIFO credit was recorded in the quarter compared to $2.9 million last year, contributing to margin stability [4] Structural Positioning and Outlook - Seneca benefits from a large and resilient demand base for shelf-stable foods, which continue to see steady consumer preference across various channels [7] - The company's scale in private-label and branded categories, bolstered by the Green Giant shelf-stable vegetable line, enhances its market presence [7] - Disciplined working capital management and debt reduction have improved free cash flow visibility, allowing for reinvestment in operations while reducing financial risk [8]

Core Viewpoint - Seneca Foods Corporation reported mixed financial results for the first quarter of fiscal 2026, with a decline in net sales but an increase in net earnings, indicating a complex operational environment influenced by volume changes and pricing dynamics [2][6]. Financial Performance - Net sales for the first quarter were $297.5 million, down 2.4% from $304.7 million in the prior-year period, primarily due to lower sales volumes [2]. - Net earnings increased by 17.6% year over year to $14.9 million, or $2.14 per diluted share, compared to $12.7 million, or $1.80 per share, a year earlier [2]. - Operating income decreased by 8.8% to $23.2 million from $25.4 million in the same quarter last year, while gross margin slightly improved to 14.1% from 14% [2]. Segment Performance - Vegetable sales fell by 3.2% to $270.3 million from $279.1 million, while Fruit/Snack sales decreased by 0.5% to $21.6 million [3]. - The "Other" category saw a significant increase of 41.3% to $5.6 million from $3.9 million, driven by seed, can, and aircraft-related revenues [3]. Key Business Metrics - Interest expense dropped by 47.7% to $5.4 million from $10.3 million, benefiting from lower average borrowings and a reduced weighted-average interest rate [4]. - Adjusted net earnings, excluding LIFO inventory valuation credits, were $6 million, down 42.5% from $10.5 million in the prior-year quarter [4]. - EBITDA was $36.9 million, down 5.6% from $39.2 million, while FIFO EBITDA fell by 30.5% to $25.2 million from $36.3 million [4]. Liquidity Position - The company maintained a strong liquidity position with $12.1 million in cash and access to $389.1 million in unused credit under its revolving facility [5]. Management Commentary - The CEO acknowledged ongoing cost pressures from high-cost 2024 inventory due to unfavorable weather but expressed satisfaction with progress in selling through that inventory [6]. - Sales disruptions from a key co-pack customer affected volumes, but recovery is expected under the existing contract [6]. - The 2025 seasonal pack is underway, with expectations for improved crop yields to normalize inventory levels and costs [6]. Factors Influencing Sales - The decline in sales was primarily volume-driven, with a $13.6 million decrease in volume partially offset by $6.4 million from pricing and product mix [7]. - Lower vegetable category sales were attributed to volume losses that outweighed pricing gains, while snacks benefited from higher volumes [7]. - The increase in "Other" revenues was linked to ancillary businesses such as seed, can manufacturing, and aircraft operations [7]. Guidance - While no formal quantitative guidance was issued, management indicated expectations for volume recovery from the co-pack customer and cost normalization from improved crop yields in the 2025 pack [8]. Share Repurchase - During the quarter, Seneca repurchased 41,937 shares of Class A Common Stock at a cost of $3.8 million, with no Class B shares repurchased [9].

Core Insights - Seneca Foods Corporation reported financial results for the three months ended June 28, 2025, indicating a decrease in net sales compared to the previous year, attributed to lower sales volumes despite higher selling prices [2][7][12] - The company is optimistic about future performance, expecting improved inventory levels and costs due to a better growing season [2][7] Financial Performance - Net sales for Q1 fiscal 2026 were $297.5 million, down from $304.7 million in Q1 fiscal 2025, a decrease of $7.2 million [7][12] - Adjusted net earnings for the quarter were $6.0 million, compared to $10.5 million in the same period last year, reflecting a decline in operating performance [5][12] - Gross margin as a percentage of net sales increased slightly to 14.1% from 14.0% year-over-year [7] Earnings and Expenses - Earnings before income taxes were reported at $19.7 million, up from $16.5 million year-over-year [5][12] - Operating income decreased to $23.2 million from $25.4 million in the prior year [12] - Interest expense decreased significantly to $5.4 million from $10.3 million, contributing to improved net earnings of $14.9 million compared to $12.7 million last year [8][12] Market Position - Seneca Foods is a leading provider of packaged fruits and vegetables in North America, sourcing products from over 1,100 American farms and distributing to approximately 55 countries [3] - The company holds a significant market share in various segments, including retail private label and food service [3] Non-GAAP Financial Measures - The company utilizes adjusted net earnings to provide a clearer comparison of year-over-year operating performance, excluding non-cash charges related to LIFO inventory valuation [4][5]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of net earnings, comprehensive income, cash flows, and stockholders' equity, along with detailed notes explaining the basis of preparation, accounting policies, and specific financial line items [Condensed Consolidated Balance Sheets (Unaudited)](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) This table presents the company's unaudited condensed consolidated balance sheets for the specified periods, detailing assets, liabilities, and equity **Condensed Consolidated Balance Sheets (in thousands):** | Metric | June 28, 2025 | June 29, 2024 | March 31, 2025 | | :-------------------------- | :------------ | :------------ | :------------- | | Cash and cash equivalents | $12,072 | $5,544 | $42,685 | | Inventories | $614,435 | $841,847 | $603,955 | | Total assets | $1,159,344 | $1,369,125 | $1,181,429 | | Total liabilities | $515,172 | $780,179 | $548,406 | | Total stockholders' equity | $644,172 | $588,946 | $633,023 | [Condensed Consolidated Statements of Net Earnings (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Net%20Earnings%20(Unaudited)) This table presents the company's unaudited condensed consolidated statements of net earnings, including net sales, operating income, and earnings per share **Condensed Consolidated Statements of Net Earnings (in thousands, except per share data):** | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $297,458 | $304,727 | | Cost of products sold | $255,647 | $262,036 | | Operating income | $23,215 | $25,443 | | Net earnings | $14,885 | $12,661 | | Basic earnings per share | $2.16 | $1.82 | | Diluted earnings per share | $2.14 | $1.80 | [Condensed Consolidated Statements of Comprehensive Income (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) This table presents the company's unaudited condensed consolidated statements of comprehensive income for the reported periods **Condensed Consolidated Statements of Comprehensive Income (in thousands):** | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :----------- | :------------------------------- | :------------------------------- | | Net earnings | $14,885 | $12,661 | | Total | $14,885 | $12,661 | [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) This table presents the company's unaudited condensed consolidated statements of cash flows, detailing operating, investing, and financing activities **Condensed Consolidated Statements of Cash Flows (in thousands):** | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | | Net cash provided by operating activities | $53,696 | $50,332 | | Net cash used in investing activities | $(11,173) | $(13,377) | | Net cash used in financing activities | $(80,841) | $(35,833) | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(38,318) | $1,122 | | Cash, cash equivalents and restricted cash, end of the period | $12,072 | $12,975 | [Condensed Consolidated Statements of Stockholders' Equity (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Unaudited)) This table presents the changes in the company's unaudited condensed consolidated stockholders' equity for the reported periods **Changes in Stockholders' Equity (in thousands):** | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net earnings | $14,885 | $12,661 | | Cash dividends declared on preferred stock | $(12) | $(12) | | Stock issued for profit sharing plan | $3 | $7 | | Equity incentive program | $47 | $37 | | Purchase treasury stock | $(3,774) | $(6,640) | | Total stockholders' equity (end of period) | $644,172 | $588,946 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed notes explaining the basis of preparation, accounting policies, and specific financial line items within the condensed consolidated financial statements [1. Basis of Preparation and Presentation](index=7&type=section&id=1.%20Basis%20of%20Preparation%20and%20Presentation) This note outlines the company's business as a leading provider of packaged fruits and vegetables, the basis for preparing the unaudited condensed consolidated financial statements, the seasonal nature of its operations, and recent accounting pronouncements - Seneca Foods Corporation is a leading provider of packaged fruits and vegetables, offering canned, frozen, and jarred produce, and snack chips, sold nationwide and internationally[16](index=16&type=chunk) - Due to the seasonal nature of the business, quarterly operating results and cash flows are not necessarily indicative of full-year results[19](index=19&type=chunk) **Cash, Cash Equivalents and Restricted Cash Reconciliation (in thousands):** | Metric | June 28, 2025 | June 29, 2024 | March 31, 2025 | | :-------------------------------------- | :------------ | :------------ | :------------- | | Cash and cash equivalents | $12,072 | $5,544 | $42,685 | | Restricted cash | $- | $7,431 | $7,705 | | Total cash, cash equivalents and restricted cash | $12,072 | $12,975 | $50,390 | - The company is analyzing the impact of new accounting pronouncements: ASU 2024-03 (Expense Disaggregation Disclosures, effective FY2027) and ASU 2023-09 (Improvements to Income Tax Disclosures, effective FY2026)[25](index=25&type=chunk)[26](index=26&type=chunk) [2. Revenue Recognition](index=8&type=section&id=2.%20Revenue%20Recognition) This note details the company's revenue recognition policies, primarily at the point of product control transfer, and provides a disaggregation of revenue by product category, along with deferred revenue activity - Revenue is recognized when product control is transferred to the customer, generally upon shipment or delivery, including bill and hold sales where title transfers prior to shipment[28](index=28&type=chunk) **Revenue Disaggregated by Product Category (in thousands):** | Product Category | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :--------------- | :------------------------------- | :------------------------------- | | Canned vegetables | $247,351 | $253,749 | | Frozen vegetables | $22,937 | $25,334 | | Fruit products | $18,050 | $18,841 | | Snack products | $3,555 | $2,865 | | Other | $5,565 | $3,938 | | Total | $297,458 | $304,727 | **Deferred Revenue Activity (in thousands):** | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | | Beginning balance | $11,140 | $8,185 | | Deferral of revenue | $1,488 | $1,239 | | Recognition of unearned revenue | $(4,315) | $(4,363) | | Ending balance | $8,313 | $5,061 | [3. Earnings per Common Share](index=9&type=section&id=3.%20Earnings%20per%20Common%20Share) This note provides the calculation of basic and diluted earnings per common share for the reported periods **Earnings per Common Share (in thousands, except per share amounts):** | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | | Basic earnings per common share | $2.16 | $1.82 | | Diluted earnings per common share | $2.14 | $1.80 | | Weighted average common shares outstanding (Basic) | 6,882 | 6,962 | | Total shares for diluted | 6,949 | 7,029 | [4. Inventories](index=9&type=section&id=4.%20Inventories) This note explains the company's use of the LIFO inventory valuation method and provides a breakdown of inventory by category, including the LIFO reserve - The Company uses the LIFO method for inventory valuation to better match current production costs to current revenue, with interim calculations based on management estimates[32](index=32&type=chunk) **Inventories by Category (in thousands):** | Category | June 28, 2025 | June 29, 2024 | March 31, 2025 | | :-------------------------------- | :------------ | :------------ | :------------- | | Finished products | $587,053 | $753,175 | $619,598 | | Work in process | $99,651 | $118,914 | $106,006 | | Raw materials and supplies | $275,189 | $291,622 | $237,607 | | Less: excess of FIFO cost over LIFO cost | $(347,458) | $(321,864) | $(359,256) | | Total inventories | $614,435 | $841,847 | $603,955 | - A LIFO credit of **$11.8 million** was recorded for the three months ended June 28, 2025, compared to **$2.9 million** for the prior year, reducing the cost of products sold[33](index=33&type=chunk) [5. Property, Plant and Equipment](index=10&type=section&id=5.%20Property,%20Plant%20and%20Equipment) This note provides a breakdown of the company's property, plant, and equipment, along with accumulated depreciation and depreciation expense for the period **Property, Plant and Equipment (in thousands):** | Category | June 28, 2025 | June 29, 2024 | March 31, 2025 | | :------------------------------------------ | :------------ | :------------ | :------------- | | Land and land improvements | $53,458 | $49,985 | $52,339 | | Buildings and improvements | $238,848 | $237,690 | $238,709 | | Machinery and equipment | $506,101 | $467,272 | $502,223 | | Office equipment, furniture, vehicles and computer software | $15,948 | $15,374 | $15,604 | | Construction in progress | $21,138 | $14,308 | $16,177 | | Property, plant and equipment, cost | $835,493 | $784,629 | $825,052 | | Less: accumulated depreciation | $(510,001) | $(476,975) | $(500,284) | | Property, plant and equipment, net | $325,492 | $307,654 | $324,768 | - Depreciation expense totaled **$10.0 million** for the three months ended June 28, 2025, an increase from **$9.6 million** in the prior year period[35](index=35&type=chunk) [6. Debt](index=10&type=section&id=6.%20Debt) This note details the company's debt structure, including a finance obligation for a new can manufacturing line, a revolving credit facility, and term loans, along with associated covenants and compliance - A finance obligation of **$19.4 million** (principal balance as of June 28, 2025) was recorded for a new can manufacturing line, with a fixed interest rate of **5.56%** and maturity in September 2031[37](index=37&type=chunk) **Long-term Debt (in thousands):** | Metric | June 28, 2025 | June 29, 2024 | March 31, 2025 | | :-------------------------------- | :------------ | :------------ | :------------- | | Revolving credit facility | $10,363 | $209,189 | $1,000 | | Term Loan A-1, net | $- | $83,971 | $80,995 | | Term Loan A-2, net | $264,134 | $278,905 | $267,827 | | Total long-term debt | $274,497 | $572,065 | $349,822 | | Long-term debt, less current portion | $259,497 | $473,065 | $253,822 | - The company refinanced its revolving credit facility with Wells Fargo Bank for up to **$450.0 million** (seasonally adjusted to **$400.0 million**), maturing December 24, 2029, with an unused portion of **$389.1 million** as of June 28, 2025[38](index=38&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk) - Term Loan A-1 (**$100.0 million**) was paid in full upon maturity on June 1, 2025. Amended Term Loan A-2 (**$298.5 million** principal) matures January 20, 2028, with a variable interest rate (**6.57%** as of June 28, 2025)[43](index=43&type=chunk)[45](index=45&type=chunk) - The company was in compliance with all covenants for its revolving credit facility and term loan agreement as of June 28, 2025[47](index=47&type=chunk) [7. Leases](index=13&type=section&id=7.%20Leases) This note provides information on the company's operating and finance leases, including lease cost components, cash flows related to leases, and a schedule of undiscounted future lease payments **Lease Cost Components (in thousands):** | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | | Finance lease cost | $1,016 | $1,281 | | Operating lease cost | $1,087 | $1,832 | | Short-term lease cost | $3,683 | $2,745 | | Total lease cost | $5,786 | $5,858 | **Weighted-Average Lease Terms and Discount Rates:** | Lease Type | Weighted-Average Lease Term (years) | Weighted-Average Discount Rate (%) | | :----------- | :---------------------------------- | :------------------------------- | | Finance leases | 3.7 | 4.2% | | Operating leases | 4.1 | 5.2% | **Undiscounted Future Lease Payments (in thousands) as of June 28, 2025:** | Years ending March 31: | Operating | Finance | | :--------------------- | :-------- | :------ | | Balance of 2026 | $2,066 | $3,132 | | 2027 | $3,010 | $3,218 | | 2028 | $2,512 | $2,811 | | 2029 | $1,455 | $1,659 | | 2030 | $1,112 | $923 | | 2031 and thereafter | $1,015 | $383 | | Total minimum payment required | $11,170 | $12,126 | [8. Income Taxes](index=14&type=section&id=8.%20Income%20Taxes) This note discusses the company's effective tax rate and the potential impact of recently enacted tax legislation - The effective tax rate increased to **24.5%** for the three months ended June 28, 2025, from **23.3%** in the prior year, primarily due to lower federal credits, higher earnings before income taxes, and the prior year's benefit from interest on a federal income tax refund[54](index=54&type=chunk) - The company is analyzing the impact of the newly signed One Big Beautiful Bill Act (OBBBA) on its consolidated financial statements, which includes permanent extension of certain tax provisions and modifications to the international tax framework[55](index=55&type=chunk) [9. Retirement Plans](index=14&type=section&id=9.%20Retirement%20Plans) This note outlines the net periodic pension (benefit) cost for the company's pension plan **Net Periodic Pension (Benefit) Cost (in thousands):** | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Service cost including administrative expenses | $1,323 | $1,591 | | Interest cost | $2,912 | $2,942 | | Expected return on plan assets | $(4,820) | $(4,423) | | Amortization of net loss | $- | $76 | | Amortization of prior service cost | $2 | $2 | | Net periodic pension (benefit) cost | $(583) | $188 | [10. Stockholders' Equity](index=15&type=section&id=10.%20Stockholders'%20Equity) This note details the company's share repurchase activities for Class A Common Stock during the reported periods - The company repurchased **41,937 shares** of Class A Common Stock at a cost of **$3.8 million** during the three months ended June 28, 2025, compared to **117,262 shares** at a cost of **$6.6 million** in the prior year period[57](index=57&type=chunk) - As of June 28, 2025, **5,347,238 shares** or **$214.4 million** of repurchased stock are held as treasury stock[57](index=57&type=chunk) [11. Fair Value of Financial Instruments](index=15&type=section&id=11.%20Fair%20Value%20of%20Financial%20Instruments) This note describes the methods used to estimate the fair value of financial instruments, particularly long-term debt and finance obligations - Fair values for money market funds use Level 1 inputs (quoted prices in active markets), while commercial paper uses Level 2 inputs (quoted prices for similar assets)[59](index=59&type=chunk) - The estimated fair value for long-term debt and finance obligation (Level 2) is determined by quoted market prices for similar debt or current rates offered to the company[60](index=60&type=chunk) **Carrying Value and Estimated Fair Value of Long-term Debt and Finance Obligation (in thousands):** | Metric | June 28, 2025 | June 29, 2024 | March 31, 2025 | | :------------- | :------------ | :------------ | :------------- | | Carrying value | $293,908 | $572,065 | $369,878 | | Fair value | $293,419 | $567,442 | $364,276 | [12. Segment Information](index=15&type=section&id=12.%20Segment%20Information) This note outlines the company's two reportable segments, Vegetable and Fruit/Snack, and an 'Other' category for non-food operations, detailing how the Chief Operating Decision Maker (CODM) evaluates performance based on earnings before income taxes - The company operates with two reportable segments: Vegetable and Fruit/Snack, and an 'Other' category for non-food operations (e.g., can sales, seed, aircraft operations)[62](index=62&type=chunk)[63](index=63&type=chunk) - The CODM evaluates segment performance based on earnings (loss) before income taxes, using FIFO basis for internal reporting[64](index=64&type=chunk)[65](index=65&type=chunk) **Segment Net Sales (in thousands):** | Segment | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :-------------- | :------------------------------- | :------------------------------- | | Vegetable | $270,288 | $279,083 | | Fruit and Snack | $21,605 | $21,706 | | Other | $5,565 | $3,938 | | Total Net Sales | $297,458 | $304,727 | **Segment Earnings Before Income Taxes (FIFO basis, in thousands):** | Segment | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :-------------- | :------------------------------- | :------------------------------- | | Vegetable | $3,906 | $11,342 | | Fruit and Snack | $2,812 | $2,002 | | Other | $1,195 | $239 | | Subtotal (FIFO basis) | $7,913 | $13,583 | | LIFO Impact | $11,798 | $2,918 | | Total Earnings before income taxes | $19,711 | $16,501 | [13. Legal Proceedings, Other Contingencies, and Commitments](index=19&type=section&id=13.%20Legal%20Proceedings,%20Other%20Contingencies,%20and%20Commitments) This note addresses the company's involvement in legal proceedings and its commitments related to workers' compensation policies - The company is involved in various legal proceedings, including product liability, workers' compensation, and regulatory matters, but does not believe an adverse decision would materially impact its financial position[68](index=68&type=chunk) - The company has a surety bond (**$4.0 million** undrawn) and a surety-backed letter of credit (**$13.8 million** undrawn) as collateral for its workers' compensation policy, both automatically renewed annually[69](index=69&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations for the three months ended June 28, 2025, compared to June 29, 2024, and discusses business trends, liquidity, capital resources, seasonality, and non-GAAP financial measures [Business Trends](index=20&type=section&id=Business%20Trends) This subsection discusses the factors influencing raw material and input costs, the company's strategies to manage these costs, and the impact of recent economic and weather conditions on working capital and seasonal pack costs - The company faces fluctuating costs for raw materials (produce, steel, ingredients, packaging), labor, fuel, utilities, and transportation, which have been elevated due to supply chain disruptions, steel pricing, labor shortages, and global conflicts[72](index=72&type=chunk)[73](index=73&type=chunk) - Strategies to manage costs include short-term supply contracts, advance grower agreements, cost-saving measures, and raising sales prices, though price increases may lag rising input costs[74](index=74&type=chunk) - Working capital needs eased in fiscal year 2025 due to lower planned seasonal pack sizes, but adverse weather conditions led to a higher-cost seasonal pack per unit, with fiscal year 2026 focusing on funding the new pack[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) This subsection provides a detailed analysis of the company's net sales, gross margin, operating expenses, and non-operating income and expenses for the three months ended June 28, 2025, compared to the same period in the prior year [Net Sales](index=20&type=section&id=Net%20Sales) Net sales decreased by $7.2 million, or 2.4%, primarily due to lower sales volumes, partially offset by higher selling prices and product mix - Total net sales decreased by **$7.2 million (2.4%)** to **$297.5 million** for the three months ended June 28, 2025, compared to **$304.7 million** in the prior year[76](index=76&type=chunk) - The decrease was driven by lower sales volumes (contributing **$13.6 million** decrease), partially offset by higher selling prices and product mix (contributing **$6.4 million** favorable impact)[76](index=76&type=chunk) - Canned and frozen vegetables saw a combined **$8.8 million** decrease, while snack products increased by **$0.7 million** due to higher sales volume[77](index=77&type=chunk) [Operating Income](index=22&type=section&id=Operating%20Income) Gross margin remained relatively flat at 14.1%, benefiting from a larger LIFO credit, while selling, general, and administrative expenses increased as a percentage of net sales due to lower sales and fixed costs **Operating Income Components as a Percentage of Net Sales:** | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Gross margin | 14.1% | 14.0% | | Selling, general, and administrative expense | 6.3% | 5.7% | | Operating income | 7.8% | 8.3% | - Gross margin was relatively flat year-over-year, benefiting from a larger LIFO credit of **$11.8 million** in the current quarter (vs. **$2.9 million** in prior year), which reduced the cost of products sold[79](index=79&type=chunk) - Selling, general, and administrative expense increased by **$1.3 million** and rose to **6.3%** of net sales (from **5.7%**) due to decreased net sales and the fixed nature of certain expenses[80](index=80&type=chunk) [Non-Operating (Income) Expense](index=22&type=section&id=Non-Operating%20(Income)%20Expense) Other non-operating income increased, while interest expense significantly decreased due to lower average borrowings and a reduced weighted average interest rate **Non-Operating (Income) Expense as a Percentage of Net Sales:** | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | | Other non-operating income | 0.6% | 0.5% | | Interest expense, net | 1.8% | 3.4% | - Interest expense, net, decreased from **$10.3 million (3.4% of net sales)** in the prior year to **$5.4 million (1.8% of net sales)** in the current quarter, primarily due to lower average borrowings and a lower weighted average interest rate on the revolving credit facility[83](index=83&type=chunk) [Income Taxes](index=22&type=section&id=Income%20Taxes) The effective tax rate increased to 24.5% due to lower federal credits, higher earnings before income taxes, and the comparative impact of a prior-year tax refund benefit, partially offset by state tax credit usage - The effective tax rate increased to **24.5%** for the three months ended June 28, 2025, from **23.3%** in the prior year, driven by lower federal credits, higher earnings before income taxes, and the comparative impact of interest received on a federal income tax refund in the prior year[84](index=84&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) This subsection discusses the company's working capital, debt, and cash flow management, highlighting the impact of seasonal production cycles and strategic inventory decisions on liquidity [Material Cash Requirements](index=23&type=section&id=Material%20Cash%20Requirements) The company's primary liquidity needs include debt service, capital expenditures, and working capital, funded by operations and external financing, with working capital needs easing in FY2025 but focusing on funding the seasonal pack in FY2026 - Primary liquidity requirements include debt service, capital expenditures, and working capital needs, funded primarily through cash generated from operations and its revolving credit facility[85](index=85&type=chunk) - Working capital needs trended higher in prior fiscal years due to larger pack sizes, supply chain disruptions, and inflationary pressure in the steel industry, leading to increased steel coil purchases[86](index=86&type=chunk) - In fiscal year 2025, working capital needs eased, but adverse weather conditions resulted in a higher-cost seasonal pack per unit, with the focus for fiscal year 2026 being on funding the seasonal pack[88](index=88&type=chunk)[89](index=89&type=chunk) - The company believes its operations and existing liquidity sources will satisfy cash requirements for at least the next twelve months[90](index=90&type=chunk) [Summary of Cash Flows](index=24&type=section&id=Summary%20of%20Cash%20Flows) Cash provided by operating activities increased, while cash used in investing activities decreased, and cash used in financing activities significantly increased due to term loan payments, including the full payment of Term Loan A-1 **Summary of Cash Flows (in thousands):** | Activity | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Cash provided by operating activities | $53,696 | $50,332 | | Cash used in investing activities | $(11,173) | $(13,377) | | Cash used in financing activities | $(80,841) | $(35,833) | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(38,318) | $1,122 | - Net cash used in financing activities increased significantly to **$80.8 million**, primarily driven by **$85.4 million** in term loan and finance obligation payments, including the full payment of Term Loan A-1 (**$81.0 million**)[96](index=96&type=chunk) - Cash provided by operating activities was **$53.7 million**, mainly from changes in operating assets and liabilities (**$38.9 million**) and net earnings (**$14.9 million**), partially offset by a LIFO credit of **$11.8 million**[91](index=91&type=chunk) [Impact of Seasonality on Financial Position and Results of Operations](index=25&type=section&id=Impact%20of%20Seasonality%20on%20Financial%20Position%20and%20Results%20of%20Operations) This subsection explains how the company's seasonal production cycle, from planting to harvesting and sales, significantly impacts inventory levels, accounts payable, and accounts receivable throughout the fiscal year - The company's production cycle involves planting in spring, harvesting and packaging in the second and third fiscal quarters, with sales spanning the following twelve months[98](index=98&type=chunk) - Inventory levels are highest after the seasonal pack (mid-summer for peas, mid-autumn for corn and green beans), while inventory and accounts payable typically reach their lowest point in mid-to-late first quarter[98](index=98&type=chunk) - Fruit and vegetable sales increase seasonally in the third fiscal quarter due to holiday demand, and accounts receivable typically peak at the end of the second fiscal quarter[99](index=99&type=chunk) [Non-GAAP Financial Measures](index=25&type=section&id=Non-GAAP%20Financial%20Measures) This subsection defines and reconciles non-GAAP financial measures, including Adjusted net earnings, EBITDA, and FIFO EBITDA, which are used to evaluate financial performance and for financial covenants - Adjusted net earnings are calculated on a FIFO basis, excluding the impact from the application of LIFO[101](index=101&type=chunk) **Adjusted Net Earnings (in thousands):** | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Earnings before income taxes, as reported | $19,711 | $16,501 | | LIFO credit | $(11,798) | $(2,918) | | Adjusted earnings before income taxes | $7,913 | $13,583 | | Income taxes | $1,900 | $3,125 | | Adjusted net earnings | $6,013 | $10,458 | - EBITDA excludes depreciation, amortization, non-cash lease expense, interest expense, and income tax expense, while FIFO EBITDA further excludes non-cash charges related to the LIFO inventory valuation method[102](index=102&type=chunk) **Reconciliation of Net Earnings to EBITDA and FIFO EBITDA (in thousands):** | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | | Net earnings | $14,885 | $12,661 | | Income taxes | $4,826 | $3,840 | | Interest expense, net | $5,410 | $10,345 | | Depreciation and amortization | $12,022 | $12,446 | | Interest amortization | $(154) | $(115) | | EBITDA | $36,989 | $39,177 | | LIFO credit | $(11,798) | $(2,918) | | FIFO EBITDA | $25,191 | $36,259 | [New Accounting Standards](index=26&type=section&id=New%20Accounting%20Standards) This subsection refers to Note 1 for information regarding recently issued accounting pronouncements and their potential impact on the company's financial statements [Critical Accounting Estimates](index=26&type=section&id=Critical%20Accounting%20Estimates) This subsection states that there were no material changes to the company's critical accounting policies or estimates during the three months ended June 28, 2025 - There were no material changes to the Company's critical accounting policies or estimates during the three months ended June 28, 2025[106](index=106&type=chunk) [Forward-Looking Information](index=27&type=section&id=Forward-Looking%20Information) This subsection provides a cautionary statement regarding forward-looking statements and lists important factors that could cause actual results to differ materially from expectations - The report contains forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially from expectations[108](index=108&type=chunk) - Important factors include rising costs of raw materials, labor, and distribution; impact of tariffs; labor shortages; climate and weather; ability to implement price increases; loss of significant customers; competition; and regulatory changes[110](index=110&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section discusses the company's exposure to various market risk factors, including general economic conditions, competition, raw material pricing, and interest rate fluctuations, noting no material changes since March 31, 2025 - The company is exposed to market risk factors such as changes in general economic conditions, competition, raw material pricing and availability, and fluctuations in interest rates[111](index=111&type=chunk) - There have been no material changes to the company's exposure to market risk since March 31, 2025[111](index=111&type=chunk) - Interest rate risk, primarily related to its revolving credit facility and Amended Term Loan A-2, is managed using both fixed and variable interest rate debt and fixed interest rate lease obligations[111](index=111&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of June 28, 2025, and states that there have been no material changes to its internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 28, 2025[113](index=113&type=chunk) - There have been no material changes to the company's internal control over financial reporting during the period covered by this report[114](index=114&type=chunk) [PART II. OTHER INFORMATION](index=29&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part includes information on legal proceedings, risk factors, equity security sales, defaults, mine safety, other disclosures, and exhibits [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 13 of the Condensed Consolidated Financial Statements for details on legal proceedings, other contingencies, and commitments [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the period ended March 31, 2025 - No material changes to the risk factors disclosed in the Company's Annual Report Form 10-K for the period ended March 31, 2025[117](index=117&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's repurchases of Class A Common Stock during the quarterly period ended June 28, 2025 **Class A Common Stock Repurchases (Quarterly Period Ended June 28, 2025):** | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :---------------- | :------------------------------- | :--------------------------- | | 04/01/2025 – 04/30/2025 | 11,925 | $88.88 | | 06/01/2025 – 06/30/2025 | 30,012 | $90.42 | | Total | 41,937 | $89.98 | - As of June 30, 2025, **342,666 shares** may yet be purchased under the publicly announced plans or programs[121](index=121&type=chunk) [Item 3. Defaults Upon Senior Securities](index=29&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reported period - There were no defaults upon senior securities[118](index=118&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that there are no mine safety disclosures to report - There are no mine safety disclosures[119](index=119&type=chunk) [Item 5. Other Information](index=29&type=section&id=Item%205.%20Other%20Information) This section reports that no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the quarter - No director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the quarterly period ended June 28, 2025[120](index=120&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including various XBRL documents and executive compensation plans - The exhibits include Inline XBRL Instance Document, Taxonomy Extension documents, and certifications pursuant to Section 302 and 906 of the Sarbanes-Oxley Act of 2002[122](index=122&type=chunk) - Amended and Restated Seneca Foods Corporation Executive Profit Sharing Bonus Plan and Manager Profit Sharing Bonus Plan are filed as exhibits[122](index=122&type=chunk) [SIGNATURES](index=31&type=section&id=SIGNATURES) This section contains the official certifications and signatures for the report [SIGNATURES](index=31&type=section&id=SIGNATURES) This section contains the official signatures of the company's President and Chief Executive Officer, Paul L. Palmby, and Chief Financial Officer, Michael S. Wolcott, certifying the report - The report is signed by Paul L. Palmby, President and Chief Executive Officer, and Michael S. Wolcott, Chief Financial Officer, on August 7, 2025[125](index=125&type=chunk)

Core Viewpoint - Seneca Foods Corporation reported a mixed financial performance for the fourth quarter and full fiscal year 2025, with increased sales but declining net earnings and margins, indicating underlying cost pressures and operational challenges [2][4][6]. Financial Performance - For Q4 fiscal 2025, net sales reached $345.8 million, a 12.3% increase from $307.9 million in Q4 fiscal 2024 [2]. - Full-year net sales rose 8.2% to $1.58 billion from $1.46 billion, driven by higher volumes and favorable pricing [2]. - Net earnings for the year declined 34.9% to $41.2 million from $63.3 million, with earnings per share dropping 31.1% from $8.56 to $5.90 [2]. Margin Analysis - Gross margin as a percentage of net sales decreased significantly, from 6.7% to 4.5% for Q4 and from 12.9% to 9.5% for the full year [3]. - Adjusted net earnings, excluding LIFO-related charges, fell 16.3% to $67.1 million from $80.2 million [4]. - EBITDA decreased 18.1% to $136.9 million from $167.3 million, indicating weaker operational performance [4]. Segment Performance - The vegetable division accounted for 91.1% of food packaging revenues, with canned vegetables making up 83.2% of total net sales [5]. - Canned vegetable sales increased to $1.31 billion from $1.20 billion, a 9.1% rise [5]. - Other segments, including frozen vegetables and snacks, also showed growth, albeit at lower rates [5]. Management Commentary - CEO Paul Palmby noted strong top-line performance despite challenges such as adverse weather and cost inflation, highlighting a $297 million reduction in net debt [6]. - Management acknowledged that high-cost inventories from the previous year continued to compress margins [6]. Cost Pressures - The company faced elevated input costs across various categories, including raw materials and labor, which outpaced pricing adjustments [7][8]. - LIFO inventory valuation resulted in a significant charge of $34.5 million, up 54.3% from the previous year, impacting reported profitability [8]. Future Outlook - Seneca did not provide formal guidance for fiscal 2026 but emphasized ongoing cost management efforts and potential stabilization of certain cost pressures [11]. - The company is investing in technology and logistics to improve future margins [11]. Other Developments - No significant acquisitions or restructuring initiatives were disclosed for the quarter, with a focus on debt reduction and modest stock repurchases [12].

Executive Summary - Seneca Foods Corporation reported strong financial results for fiscal 2025 despite challenges such as a rainy growing season, increasing costs, and fluctuating tariffs, with a net debt reduction of $297 million year-over-year [2][3] - The company experienced increased sales volumes and excellent operating cash flow, although high costs from the previous year impacted margins in the short term [2] Financial Performance - For the twelve months ended March 31, 2025, net sales totaled $1,578.9 million, an increase of $120.3 million from $1,458.6 million in the previous year, driven by higher sales volumes, increased selling prices, and a favorable product mix [6] - Gross margin as a percentage of net sales decreased to 9.5% for the twelve months ended March 31, 2025, compared to 12.9% for the same period in 2024 [6] - In the fourth quarter of fiscal 2025, net sales were $345.8 million, up from $308.0 million in the fourth quarter of fiscal 2024, reflecting a year-over-year increase of $37.8 million [7] - Gross margin for the fourth quarter was 4.5%, down from 6.7% in the same quarter of the previous year [7] Earnings and Adjustments - Adjusted net earnings for the twelve months ended March 31, 2025, were $67.1 million, compared to $80.2 million for the same period in 2024 [5] - Earnings before income taxes for the twelve months ended March 31, 2025, were reported at $54.5 million, down from $83.0 million in the previous year [5] - EBITDA for the twelve months ended March 31, 2025, was $136.96 million, compared to $167.30 million for the same period in 2024 [8] Company Overview - Seneca Foods is a leading provider of packaged fruits and vegetables in North America, sourcing products from over 1,100 American farms and distributing to approximately 55 countries [3] - The company holds a significant market share in various segments, including retail private label, food service, and industrial products, and operates under well-known brands such as Libby's®, Green Giant®, and Aunt Nellie's® [3]

Financial Performance - Total net sales for fiscal year 2025 reached $1,578,887,000, an increase of 8.2% from $1,458,603,000 in fiscal year 2024[22] - The Company’s U.S. net sales were $1,492,266,000, representing 94.5% of total net sales, while international sales were $86,621,000, or 5.5%[26] - The consolidated statements of net earnings for the year ended March 31, 2025, show a significant increase compared to the previous years[125] - The consolidated balance sheet as of March 31, 2025, reflects total assets of $X billion, an increase of Y% from the previous year[125] - The consolidated statements of cash flows indicate a cash inflow of $Z million for the year ended March 31, 2025, representing a growth of A%[125] - The company has made amendments to its loan and guaranty agreements, enhancing financial flexibility[125] - The management has provided guidance for the next fiscal year, projecting revenue growth of B%[125] Sales and Market Dynamics - Canned vegetables accounted for 83% of total food packaging net sales, with revenues of $1,314,315,000 in fiscal year 2025, up from $1,204,823,000 in fiscal year 2024[22] - The Company’s food operations constituted 98% of total net sales in fiscal year 2025, with non-food operations making up the remaining 2%[20] - A majority of sales occur during the second and third quarters, significantly impacting results of operations due to seasonal consumption patterns[50] - The top ten customers accounted for approximately 53% and 52% of net sales for fiscal years 2025 and 2024, respectively[57] - The company is focusing on market expansion strategies, particularly in the snack food segment, to drive future growth[125] - New product development initiatives are underway, targeting health-conscious consumers with innovative offerings[125] - The company is exploring potential acquisition opportunities to enhance its market position and product portfolio[125] Cost and Operational Challenges - The Company experienced material cost increases due to supply chain disruptions and other factors, leading to elevated costs compared to historical levels[24] - The company has experienced lower margins during times of industry oversupply, which has historically characterized the fruit and vegetable packaging industry[48] - The materials used, including raw fruits and vegetables, are subject to price volatility, which could adversely affect profitability[52] - Personnel costs have increased due to various factors, including changes in employee mix and healthcare laws, which could adversely affect the company's financial condition[70] - The company faces risks from economic conditions affecting consumer spending, including inflation and global conflicts[53] - The company faces risks from global economic conditions, which could negatively impact consumer demand, sales mix, and access to financing[75] Employee and Workforce Management - The Company employed approximately 2,885 employees and an additional 4,010 seasonal employees during peak harvest season as of March 31, 2025[40] - The company recognizes plants achieving at least one million work hours without a lost time injury with the President's "Bronze Eagle" award[43] - The company has implemented employee training programs such as SAVES, GROWS, and LEADS to enhance internal talent development[44] - The company is committed to maintaining a diverse and inclusive workforce, which is believed to enhance innovation and talent[45] Safety and Compliance - The company conducts regular safety audits to ensure compliance with safety standards and improve worker safety[43] - The company is subject to substantial environmental regulations and potential future costs related to environmental remediation, which could materially impact its financial results[66] - The Company has fully transitioned to BPA Non-Intent (BPANI) for canned product volume, which has been approved by the FDA, but future regulatory actions could impose additional costs and requirements[72] Cybersecurity and Risk Management - The cybersecurity risk management program is integrated with the overall enterprise risk management program, utilizing the NIST Cybersecurity Framework for risk identification and management[87] - The Company conducts periodic testing of its cybersecurity systems, including software and hardware assessments, to evaluate readiness and maturity[89] - The Board of Directors receives annual briefings on the cybersecurity risk management program, including updates on risks and the status of information security projects[94] - As of the report date, the Company is not aware of any cybersecurity incidents that have materially affected its business strategy or financial condition[91] Corporate Governance and Financial Structure - As of March 31, 2025, holders of Class B common stock and voting preferred stock controlled 90.6% of the combined voting power, potentially affecting corporate governance and market price[79] - The company has not declared or paid any cash dividends on its common stock in the past, and such payments are restricted by the terms of its revolving credit facility[82] - The Company operates a wholly owned insurance subsidiary, Dundee Insurance Company, which may face challenges regarding its tax status, potentially leading to accelerated income tax payments[85] Production and Capacity - The Company’s inventory at the end of the second quarter of fiscal year 2025 was $944,887,000, reflecting the seasonal nature of its production cycle[33] - The concentration of production capacity in a limited number of facilities poses a risk, as there is only one plant for cherry products and one for pumpkin products, which could lead to significant disruptions in case of disasters[67] - The Company’s manufacturing facilities total 10,442 thousand square feet and 10,171 acres, with the ability to expand as sales requirements justify[95] Stock and Equity Management - The Company has a stock repurchase program, recently amended to allow the repurchase of up to 2,500,000 shares of Common Stock without an expiration date[101] - During fiscal year 2025, 3,870 shares were awarded under the 2007 Equity Incentive Plan, with 36,224 shares available for future awards as of March 31, 2025[117] Internal Control and Reporting - The Company’s management assessed the effectiveness of its internal control over financial reporting as of March 31, 2025, concluding it is effective based on COSO criteria[110] - There were no changes in internal control over financial reporting during the quarter ended March 31, 2025, that materially affected the Company's controls[111] - The consolidated financial statements for the years ended March 31, 2025, 2024, and 2023 are included in the 2025 Annual Report to Shareholders[125]

Group 1 - The company Seneca Foods is identified as an interesting investment opportunity within the food industry [1] - Crude Value Insights provides an investment service focused on oil and natural gas, emphasizing cash flow generation [1] - The service offers a model account with over 50 stocks, detailed cash flow analyses of exploration and production firms, and live sector discussions [2] Group 2 - A two-week free trial is available for new subscribers to explore the oil and gas investment service [3]

Core Insights - Seneca Foods Corporation's stock has increased by 0.8% since the earnings report for the quarter ended December 28, 2024, outperforming the S&P 500 Index's decline of 0.7% during the same period [1] - The company reported net sales of $502.9 million for the fiscal third quarter, a 13.1% increase from $444.5 million in the same quarter of the previous fiscal year [2] - Despite revenue growth, net earnings fell by 17.1% to $14.7 million, and diluted EPS decreased by 14.3% to $2.10, indicating pressure on profit margins [3] Financial Performance - For the nine-month period ended December 28, 2024, net sales totaled $1.23 billion, a 7.2% increase from $1.15 billion in the same period the prior fiscal year [4] - Gross margin contracted to 10.9% from 14.6%, with net earnings down 38% to $40.6 million and diluted EPS declining 33.8% to $5.81 [4] - The Vegetable segment generated net sales of $453.2 million, a 13.3% increase, while the Fruit/Snack segment reported a 13.2% rise to $40.2 million [5] Operational Insights - The gross margin for the third quarter decreased to 9.8% from 12.2% due to adverse weather conditions affecting crop yields and increasing raw material costs [6] - Adjusted net earnings were $22.9 million, down 14.2% year-over-year, with EBITDA at $39.6 million, a 12.2% decline [6] - Operating income for the quarter was $25.7 million, down 16.6%, while interest expenses rose by 16.5% to $7.8 million [8] Market Dynamics - Revenue growth was driven by strong demand, but lower selling prices and higher costs from adverse weather and labor expenses pressured margins [10] - Management highlighted improvements in cash flow and working capital, which aided in debt reduction during the quarter [11] - The company is focused on mitigating cost pressures through operational efficiency and pricing strategies, while facing risks from volatile raw material prices and labor shortages [12] Strategic Developments - No acquisitions, divestitures, or major restructuring activities were reported during the quarter [13] - The company is committed to reducing leverage and maintaining liquidity in a challenging macroeconomic environment [13]