Core Viewpoint - Seneca Foods Corporation reported a significant decline in earnings per share (EPS) for the second quarter of fiscal 2025, alongside mixed revenue performance across its product segments [1][7]. Revenue Performance - Seneca Foods registered revenues of $425.5 million in the fiscal second quarter, reflecting a year-over-year increase of 4.4% due to higher sales volumes, product mix, and increased selling prices [2]. - Canned vegetables revenues were $351.3 million, up 6.9% from the previous year, while frozen vegetables revenues decreased by 9.2% to $39.1 million [3]. - Fruit products revenues were $22.3 million, down 2.1%, snack products revenues were $4 million, down 5.1%, and revenues in the Other category totaled $8.8 million, down 0.3% [4]. Profitability Metrics - The gross margin for the quarter was 10.1%, a decrease from 14.3% in the prior year, primarily due to elevated costs [5]. - Operating income totaled $24.7 million, down 35.8% year over year, and net income was $13.3 million, down 46.3% [7]. - FIFO EBITDA for the quarter was $53.5 million, reflecting a decline of 13.5% from the previous year [7]. Operating Expenses - Selling, general, and administrative expenses decreased by 14.1% year over year to $18.1 million [6]. Liquidity and Debt Management - At the end of the second quarter, cash and cash equivalents were $9.5 million, up from $5.5 million at the end of the first quarter, while total debt decreased to $514.5 million from $580.5 million [8]. - Cumulative net cash provided by operating activities was $125.9 million, compared to a net cash used of $26.3 million a year ago [9]. Overall Assessment - The company showed encouraging top-line results, particularly in the canned vegetables segment, but faced disappointing bottom-line results and lower revenues from most product categories, alongside a contraction in gross margin [10].

Financial Performance - Net sales for the three months ended September 28, 2024, totaled $425.5 million, an increase of $18.0 million or 4.4% compared to $407.5 million for the same period in 2023[76] - Net sales for the six months ended September 28, 2024, reached $730.2 million, reflecting a $24.1 million increase or 3.4% from $706.1 million in the prior year[78] - Net sales of canned vegetables increased by $25.4 million for the six months ended September 28, 2024, driven by higher demand and pricing[79] - Net earnings for the three months ended September 28, 2024, were $13,303,000, a decrease from $24,779,000 for the same period in 2023, representing a decline of approximately 46%[116] - EBITDA for the three months ended September 28, 2024, was $38,481,000, compared to $52,470,000 for the same period in 2023, reflecting a decrease of about 27%[116] - FIFO EBITDA for the six months ended September 28, 2024, was $89,717,000, down from $109,423,000 for the same period in 2023, indicating a decline of approximately 18%[116] - Adjusted net earnings for the six months ended September 28, 2024, were $24.611 million, down from $31.775 million for the same period in 2023[114] Cost and Expenses - Gross margin for the three months ended September 28, 2024, was 10.1%, down from 14.3% in the prior year, primarily due to elevated costs[80] - Selling, general, and administrative expenses as a percentage of net sales decreased to 4.2% for the three months ended September 28, 2024, compared to 5.2% for the same period in 2023[81] - Interest expense increased to $9.0 million for the three months ended September 28, 2024, from $7.2 million in the prior year, representing 2.1% of net sales[87] - The company experienced material cost increases due to supply chain disruptions and raw material shortages, although some factors have started to stabilize[73] - The company anticipates challenges in implementing sales price increases and cost-saving measures to offset rising costs[120] Tax and Equity - The effective tax rate for the six months ended September 28, 2024, was 22.7%, a decrease from 23.8% in the prior year, influenced by federal credits and tax refunds[94] - Total stockholders' equity per common share increased to $86.87 as of September 28, 2024, compared to $80.34 a year prior, indicating a growth of 8.5%[96] Cash Flow and Working Capital - Cash provided by operating activities for the six months ended September 28, 2024, was $125.868 million, a significant increase from $(26.279) million for the same period in 2023[102] - Working capital decreased to $669.978 million as of September 28, 2024, down from $724.694 million a year earlier, reflecting a quarterly change of $(36.194) million[96] - The company has experienced an easing of working capital needs, although adverse weather conditions have impacted crop yields and seasonal pack sizes[99] - The company plans to normalize working capital trends, particularly surrounding inventory, due to higher finished goods inventory levels as of the end of fiscal year 2024[98] Investment and Financing Activities - Net cash used in investing activities was $19.916 million for the six months ended September 28, 2024, primarily for capital expenditures of $17.6 million[105] - Net cash used in financing activities was $100.738 million for the six months ended September 28, 2024, mainly due to a net paydown on the revolving credit facility of $90.8 million[107] Risks and Market Conditions - The company faces risks from rising costs of raw materials, labor shortages, and competition, which could impact future performance[120] - The company has not experienced material changes in its exposure to market risk since March 31, 2024, including interest rate fluctuations related to its credit facilities[123] - Forward-looking statements indicate potential impacts from various factors, including supply chain disruptions and regulatory changes[121] Other Financial Metrics - The current ratio as of September 28, 2024, was 2.64, slightly down from 2.67 a year earlier, indicating stable liquidity[96] - The company expects to maintain sufficient liquidity to retire or refinance long-term debt maturing on June 1, 2025, through operating cash flows and access to capital markets[100] - The company incurred minimal restructuring charges during the three months ended September 28, 2024, compared to higher charges in the prior year[82] - Other non-operating income totaled $1.4 million for the three months ended September 28, 2024, slightly up from $1.3 million in the prior year[86] - The company reported a LIFO charge of $14,977,000 for the three months ended September 28, 2024, compared to $9,316,000 for the same period in 2023, an increase of about 61%[116] - There were no material changes to the company's critical accounting policies or estimates during the six months ended September 28, 2024[118] - The company is focused on managing interest rate risk through a combination of fixed and variable interest rate debt[123]

Core Viewpoint - Seneca Foods Corporation reported a significant decline in earnings per share and net income for the first quarter of fiscal 2025, despite a slight increase in revenues year over year [1][8]. Revenue Details - Revenues for the first quarter reached $304.7 million, reflecting a 2% increase from the previous year, driven by higher sales volumes [2]. - Canned vegetables generated $253.7 million in revenue, up 1.1% year over year, while frozen vegetables saw a more substantial increase of 17.6%, totaling $25.3 million [3][4]. - Fruit products revenues increased by 12.6% to $18.8 million, benefiting from higher pricing and sales volumes, whereas snack products revenues decreased by 7.5% to $2.9 million [4]. - The "Other" category experienced a significant decline of 37.9%, totaling $3.9 million, primarily due to lower demand for ancillary products [5]. Gross Margin and Operating Expenses - The gross margin for the quarter was 14%, down from 18.5% in the same period last year, attributed to elevated costs [6]. - Selling, general, and administrative expenses decreased by 11.9% to $17.5 million [7]. Profitability Metrics - Operating profit fell to $25.4 million, a decrease of 28.3% from the prior year, while net income dropped 45.2% to $12.7 million [8]. - FIFO EBITDA for the quarter was reported at $36.3 million, down 23.9% year over year [8]. Liquidity and Debt Management - At the end of the first quarter, cash and cash equivalents increased to $5.5 million from $4.5 million at the end of fiscal 2024, while total debt decreased to $580.5 million from $615.9 million [9]. - Net cash provided by operating activities improved to $50.3 million compared to $25 million a year ago [9]. Overall Assessment - The company showed encouraging top-line results with strength in most revenue sources, but the bottom-line results were disappointing, with a contraction in gross margin indicating potential challenges ahead [10].

Core Insights - SENEA demonstrated a robust fiscal 2024 performance despite a decline in net sales, with a significant increase in gross margin to 12.9%, up from 6.9% in fiscal 2023, reflecting effective cost management and operational efficiency [1] Company Overview - Seneca Foods, headquartered in Fairport, NY, is a provider of packaged fruits and vegetables, operating 26 main facilities across the United States, with a diverse product portfolio including well-known brands like Libby's and Green Giant [3] Strategic Initiatives - The strategic acquisition of the Green Giant shelf-stable vegetable product line from B&G Foods, Inc. for $55.2 million is expected to bolster market share and operational capabilities [4] - Continued investment in technology and efficiency enhances production processes and logistical support, contributing to the resilience of its brands amid competitive pressures [4] Financial Health - As of March 31, 2024, Seneca Foods operates under a senior revolving credit facility of up to $400 million, with a revolver balance of $237.2 million [7] - The company's stock has significantly outperformed its industry peers and the broader market over the past year, currently trading at low valuation multiples relative to industry standards, presenting a potential opportunity for investors [8] Market Positioning - Zacks Investment Research has initiated coverage of Seneca Foods, assigning a "Neutral" recommendation amid a mixed outlook for the company, which has been making notable strides in the packaged fruits and vegetables space despite industry challenges [6][9]

Core Viewpoint - Seneca Foods reported mixed financial results for Q4 FY24, with higher selling prices offsetting lower sales volume, leading to a net loss of $2.2 million compared to a loss of $33.1 million a year earlier. However, EBITDA decreased by 22.7% year-on-year when using the FIFO method, indicating concerns about the sustainability of high margins [9][12]. Financial Performance - For Q4 FY24, net sales were $308 million, a 7% decrease year-on-year. The operating income was impacted by the LIFO method, which decreased operating income by $2.7 million compared to $52.3 million a year earlier [11][12]. - The company’s net debt increased to $632.6 million from $470.5 million a year earlier, driven by a $201.8 million rise in inventories due to higher raw material costs [3][16]. - Seneca Foods invested $33 million in share buybacks during FY24, but rising debt levels may limit future buybacks [3][16]. Valuation Metrics - Seneca Foods is currently trading at 6.7x EV/EBITDA and a similar level for P/E, with a price to tangible book value of 0.7x, indicating that the company is not expensive based on historical financial multiples [6][15]. - The company’s financial results appear strong under the LIFO method, but the FIFO method presents a less favorable picture, suggesting potential valuation concerns [6][12]. Business Overview - Seneca Foods, founded in 1949, primarily produces canned vegetables, contributing around 80% of its revenues. The company operates 26 facilities across the USA and has a diverse product range including packaged fruits and sauces [10][11]. - The business operates in a highly competitive seasonal market, with peak sales and net earnings typically occurring in the second and third quarters of the fiscal year [11]. Future Outlook - The company is expected to face challenges in FY25, with revenues and EBITDA likely to remain at similar levels to FY24 due to its mature business model. Rising net debt is anticipated to lead to a decrease in net income in the low double-digit percentage range [16][17]. - There are concerns about the sustainability of high margins and the potential for Seneca Foods to be viewed as a value trap, with no positive catalysts on the horizon [6][15].

Core Insights - Seneca Foods reported a full-year earnings per share of $8.56, reflecting a significant increase of 637.9% compared to the fiscal 2023 period [1] - The company experienced a decline in quarterly revenues primarily due to lower sales volumes, although this was partially offset by higher selling prices [2] - For fiscal 2024, domestic sales amounted to $1.37 billion, a decrease of 2.4% from the comparable fiscal 2023 period [3] Revenue Breakdown - Revenues from fruit products and snack products during fiscal 2024 were $87.4 million and $13.4 million, showing a decline of 4.4% and an increase of 5.8% respectively from the fiscal 2023 period [5] - Frozen vegetables sales totaled $120.8 million, down 0.3% from the comparable fiscal 2023 period [9] - Canned vegetables reported revenues of $1.20 billion, down 3.9% from the comparable fiscal 2023 period [17] - Revenues from the Other category were $32.2 million, up 4.6% from the comparable fiscal 2023 period [18] - International sales for fiscal 2024 amounted to $83.8 million, down 16.7% from the comparable fiscal 2023 period [16] Profitability and Margins - Seneca Foods' gross margin for the fiscal fourth quarter was 6.7%, while for fiscal 2024, it was 12.9%, representing an expansion of 599 basis points [19] - The adjusted operating profit for fiscal 2024 totaled $107 million, indicating a 360.3% increase from the comparable fiscal 2023 period, with an adjusted operating margin expansion of 580 basis points to 7.3% [21] - The net loss for the fourth quarter was $2.3 million, an improvement from the net loss of $33.1 million in the prior-year quarter [10] Cash Flow and Debt Management - Seneca Foods exited fiscal 2024 with cash of $4.5 million, down from $5.2 million at the end of fiscal 2023 [12] - Cumulative net cash provided by operating activities at the end of fiscal 2024 was $4.9 million, compared to $63.9 million a year ago [13] - Total debt at the end of fiscal 2024 was $615.9 million, an increase from $458.5 million at the end of fiscal 2023 [22] Overall Performance - Full-year revenues were $1.46 billion, indicating a decline of 3.4% from the comparable fiscal 2023 period [15] - The company’s performance in the reported quarter was disappointing, particularly in the canned vegetables, frozen vegetables, and fruit products categories [23]

Core Viewpoint - Seneca Foods Corporation reported a decrease in net sales for the fiscal year 2024 compared to the previous year, primarily due to lower sales volumes, although this was partially offset by higher selling prices [2][18]. Company Overview - Seneca Foods is a leading provider of packaged fruits and vegetables in North America, sourcing products from over 1,200 American farms and distributing to approximately 55 countries. The company holds significant market shares in various segments, including retail private label and food service [4][5]. Financial Performance - For the twelve months ended March 31, 2024, net sales totaled $1,458.6 million, down from $1,509.4 million in the previous year, reflecting a year-over-year decrease of $50.8 million [2]. - The gross margin as a percentage of net sales improved to 12.9% for the twelve months ended March 31, 2024, compared to 6.9% for the same period in 2023 [17]. - The company reported a net loss of $2.2 million for the fourth quarter of fiscal 2024, compared to a net loss of $33.1 million in the same quarter of the previous year [13][14]. Quarterly Results - In the fourth quarter of fiscal 2024, net sales were $308.0 million, down from $331.1 million in the fourth quarter of fiscal 2023, marking a decrease of $23.1 million [18]. - The operating income for the fourth quarter was $2.5 million, a significant improvement from a loss of $36.9 million in the same quarter of the previous year [13][14]. Cost and Operational Insights - The company faced challenges related to rising costs of raw materials, including fruits, vegetables, and packaging, which impacted overall profitability [10]. - Minimal restructuring charges were incurred during fiscal year 2024, primarily related to ceasing Northeast trucking fleet operations [14]. Earnings Metrics - Adjusted net earnings for the twelve months ended March 31, 2024, were $80.2 million, compared to $107.8 million for the previous year [16][21]. - EBITDA for the twelve months ended March 31, 2024, was reported at $167.3 million, an increase from $80.4 million in the previous year [21].

[Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section details forward-looking statements, their inherent risks, and factors that could cause actual results to differ materially - This Annual Report on Form 10-K contains forward-looking statements addressing future events, developments, and results, identifiable by words like 'will,' 'anticipate,' 'estimate,' 'expect,' and 'project'[13](index=13&type=chunk) - Forward-looking statements are subject to known and unknown risks, uncertainties, and other important factors that could cause actual results to differ materially from expectations[13](index=13&type=chunk) - Key factors that could cause actual results to differ include rising costs of raw materials, distribution, and labor; crude oil prices; labor shortages; climate and weather impacts; ability to implement price increases; loss of significant customers; competition; and the impact of pandemics[14](index=14&type=chunk) PART I [Item 1. Business](index=6&type=section&id=Item%201.%20Business) Seneca Foods Corporation is a leading packaged fruit and vegetable provider, focusing on market share growth, cost efficiency, and strategic acquisitions, with food operations constituting 98% of FY2024 net sales [Overview](index=6&type=section&id=Overview) Seneca Foods Corporation is a leading packaged fruit and vegetable provider, operating 26 facilities across the U.S., with strategies focused on market leadership and efficiency - Seneca Foods Corporation, founded in 1949, is a leading provider of packaged fruits and vegetables, operating **26 main facilities** across the United States[16](index=16&type=chunk) - The Company's business strategies include expanding leadership in the packaged fruit and vegetable industry, providing low-cost, high-quality products through supply chain efficiency and technology investment, focusing on growth opportunities, and pursuing strategic acquisitions[17](index=17&type=chunk) [Available Information](index=6&type=section&id=Available%20Information) The Company's SEC filings and corporate governance information are publicly accessible on its website - The Company's SEC filings (10-K, 10-Q, 8-K) and corporate governance information are available free of charge on its website, www.senecafoods.com[18](index=18&type=chunk)[19](index=19&type=chunk) [Financial Information about Industry Segments](index=6&type=section&id=Financial%20Information%20about%20Industry%20Segments) Seneca manages its business through two primary food packaging segments: Vegetable and Fruit/Snack, with food operations comprising 98% of total net sales - Seneca manages its business primarily through two food packaging segments: Vegetable and Fruit/Snack. Non-food operations are categorized as 'Other'[20](index=20&type=chunk) Fiscal Year 2024 Net Sales by Segment | Segment | Percentage of Total Food Packaging Net Sales | Percentage of Total Net Sales | | :---------------- | :------------------------------------------- | :---------------------------- | | Canned vegetables | 83% | 81.34% (approx) | | Frozen vegetables | 8% | 7.84% (approx) | | Fruit products | 6% | 5.88% (approx) | | Snack products | 1% | 0.98% (approx) | | Food Operations | 98% (of total net sales) | 98% | | Non-food packaging| - | 2% | [Principal Products and Markets](index=6&type=section&id=Principal%20Products%20and%20Markets) The Company offers canned, frozen, and jarred produce, and snack chips, sold under private labels, owned/licensed brands, and to industrial customers - The Company's main product offerings include canned, frozen, and jarred produce, and snack chips[21](index=21&type=chunk) - Products are sold as private label to retailers, private label and branded to foodservice, under owned/licensed brands (e.g., Seneca®, Libby's®, Green Giant®), co-packed for other major brands, and to industrial customers[21](index=21&type=chunk) Net Sales by Major Product Category (in thousands) | Product Category | Fiscal Year 2024 | Fiscal Year 2023 | | :--------------- | :--------------- | :--------------- | | Canned vegetables| $1,204,823 | $1,253,257 | | Frozen vegetables| $120,795 | $121,211 | | Fruit products | $87,435 | $91,495 | | Snack products | $13,400 | $12,661 | | Other | $32,150 | $30,728 | | Total Net Sales | $1,458,603 | $1,509,352 | Domestic and International Sales (in thousands, except percentages) | Sales Type | Fiscal Year 2024 | % of Net Sales 2024 | Fiscal Year 2023 | % of Net Sales 2023 | | :------------ | :--------------- | :------------------ | :--------------- | :------------------ | | Domestic | $1,374,774 | 94.3% | $1,408,710 | 93.3% | | International | $83,829 | 5.7% | $100,642 | 6.7% | | Total Net Sales | $1,458,603 | 100.0% | $1,509,352 | 100.0% | [Source and Availability of Raw Materials](index=7&type=section&id=Source%20and%20Availability%20of%20Raw%20Materials) The Company sources raw materials primarily from American farms and manages cost inflation through various strategies, including price increases - The Company sources high-quality products primarily from over **1,200 American farms** and purchases other raw materials (steel, ingredients, packaging) from various suppliers[23](index=23&type=chunk) - Material cost inflation for raw materials and input costs (labor, fuel, utilities, transportation) continues due to supply chain disruptions, labor shortages, and global conflicts[24](index=24&type=chunk) - Seneca manages cost inflation risks through short-term supply contracts, advance grower agreements, cost-saving measures, and raising sales prices, though price increases may lag behind rising costs due to competitive pressures[24](index=24&type=chunk) [Intellectual Property](index=7&type=section&id=Intellectual%20Property) Seneca holds perpetual and renewable licenses for key brands like Green Giant® and Libby's®, alongside its own registered trademarks - The Company holds a perpetual, royalty-free license for the Green Giant® brand name for shelf-stable vegetable products in the U.S. and certain Caribbean islands[26](index=26&type=chunk) - Seneca holds a renewable trademark license for the Libby's® brand name for shelf-stable, frozen, and thermally packaged vegetables, paying an annual royalty of **$0.1 million** for fiscal year ended March 31, 2024[27](index=27&type=chunk)[29](index=29&type=chunk) - The Company also sells products under its own registered trademarks, including Aunt Nellie's®, CherryMan®, Green Valley®, READ®, and Seneca®[30](index=30&type=chunk) [Seasonality](index=9&type=section&id=Seasonality) The Company's production and sales cycles are seasonal, with peak revenues typically occurring in the second and third fiscal quarters - The Company's production cycle is seasonal, with minimal food packaging in the last fiscal quarter (ending March 31) and peak inventory levels for peas in mid-summer, and for corn and green beans in mid-autumn[31](index=31&type=chunk) - Revenues are typically highest in the second and third fiscal quarters due to increased retail demand during the holiday season and bill-and-hold sales to co-pack customers[32](index=32&type=chunk) Unaudited Quarterly Financial Information (in thousands) | Metric | Q1 FY2024 | Q2 FY2024 | Q3 FY2024 | Q4 FY2024 | Q1 FY2023 | Q2 FY2023 | Q3 FY2023 | Q4 FY2023 | | :------------------------- | :---------- | :---------- | :---------- | :---------- | :---------- | :---------- | :---------- | :---------- | | Net sales | $298,664 | $407,475 | $444,481 | $307,983 | $265,193 | $439,842 | $473,254 | $331,063 | | Gross margin | $55,289 | $58,118 | $54,033 | $20,778 | $22,843 | $41,779 | $53,789 | $(14,092) | | Net earnings (loss) | $23,111 | $24,779 | $17,675 | $(2,247) | $5,103 | $16,131 | $21,054 | $(33,057) | | Revolver outstanding (Q-end)| $52,064 | $134,757 | $258,108 | $237,225 | $78,965 | $229,213 | $313,808 | $180,598 | [Competition](index=9&type=section&id=Competition) The packaged food industry is highly competitive, with Seneca facing numerous national and regional producers, including those with higher sales - The packaged food industry is highly competitive, with brand recognition, promotion, quality, service, and pricing as major determinants of market position[34](index=34&type=chunk) - Seneca is a major producer of canned vegetables, frozen vegetables, and jarred fruit, but faces competition from at least **13 other U.S. producers**, some with higher sales[34](index=34&type=chunk) [Government Regulation](index=9&type=section&id=Government%20Regulation) The Company is subject to extensive federal, state, and local regulations concerning

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-01989 Seneca Foods Corporation (Exact name of Registrant as specified in its charter) New York 16-0733425 (St ...

PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the period ended September 30, 2023, show total assets increasing to **$1.57 billion** driven by inventory growth, net earnings more than doubling to **$47.9 million** due to a lower LIFO charge, and improved operating cash flow despite seasonal inventory build-up, alongside a **$55.6 million** acquisition [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2023, total assets increased to **$1.57 billion** driven by a rise in inventories to **$1.01 billion**, while total liabilities grew to **$988.5 million** and stockholders' equity reached **$583.2 million** Consolidated Balance Sheet Highlights (In thousands) | Account | Sep 30, 2023 | Oct 1, 2022 | Mar 31, 2023 | | :--- | :--- | :--- | :--- | | **Total current assets** | $1,157,511 | $999,883 | $794,039 | | Inventories | $1,013,447 | $814,966 | $670,898 | | **Total assets** | **$1,571,720** | **$1,397,972** | **$1,212,721** | | **Total current liabilities** | $432,817 | $445,215 | $156,188 | | Long-term debt, less current portion | $492,685 | $316,345 | $432,695 | | **Total liabilities** | **$988,495** | **$834,565** | **$657,971** | | **Total stockholders' equity** | **$583,225** | **$563,407** | **$554,750** | [Condensed Consolidated Statements of Net Earnings](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Net%20Earnings) For the six months ended September 30, 2023, net sales remained flat at **$706.1 million**, while operating income surged to **$73.9 million** and diluted EPS increased to **$6.30**, primarily driven by a lower cost of products sold Statement of Net Earnings Highlights (In thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $407,475 | $439,842 | $706,139 | $705,035 | | Operating income | $38,424 | $21,836 | $73,921 | $28,432 | | Net earnings | $24,779 | $16,131 | $47,890 | $21,234 | | Diluted EPS | $3.29 | $2.03 | $6.30 | $2.62 | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended September 30, 2023, net cash used in operating activities significantly improved to **$26.3 million** despite seasonal inventory build-up, while investing activities used **$18.9 million** and financing activities provided **$45.0 million** primarily from borrowings Cash Flow Summary (In thousands) | Activity | Six Months Ended Sep 30, 2023 | Six Months Ended Oct 1, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(26,279) | $(133,621) | | Net cash used in investing activities | $(18,886) | $(29,826) | | Net cash provided by financing activities | $44,990 | $165,430 | | **Net (decrease) increase in cash** | **$(175)** | **$1,983** | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes reveal revenue is primarily from canned vegetables, a significantly lower LIFO charge boosted profitability, long-term debt increased to **$511.9 million**, **$19.6 million** in stock was repurchased, and a **$55.6 million** acquisition of the Green Giant® shelf-stable product line occurred subsequently - On November 8, 2023, the Company acquired certain assets of the Green Giant® shelf-stable vegetable product line from B&G Foods, Inc. for an initial purchase price of approximately **$55.6 million** in cash[69](index=69&type=chunk) - For the six months ended September 30, 2023, the company repurchased **386,681 shares** of its Class A Common Stock for **$19.6 million**[61](index=61&type=chunk) Revenue by Product Category (Six Months Ended, In thousands) | Product Category | Sep 30, 2023 | Oct 1, 2022 | | :--- | :--- | :--- | | Canned vegetables | $579,536 | $583,084 | | Frozen vegetables | $64,585 | $59,806 | | Fruit products | $39,539 | $42,303 | | Snack products | $7,354 | $6,675 | | Other | $15,125 | $13,167 | | **Total** | **$706,139** | **$705,035** | - The LIFO charge decreased significantly, with an increase to cost of products sold of **$7.6 million** for the six months ended Sep 30, 2023, compared to **$48.4 million** for the same period in 2022[34](index=34&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes increased profitability for the first six months of fiscal 2024 to a significantly lower LIFO charge, which boosted gross margin to **16.1%** despite flat net sales, while liquidity is managed through a revolving credit facility and increased debt, with remediation underway for a material weakness in year-end LIFO calculation controls [Results of Operations](index=18&type=section&id=Results%20of%20Operations) For the six months ended September 30, 2023, net sales marginally increased to **$706.1 million** due to higher prices offsetting lower volumes, while gross margin substantially improved to **16.1%** driven by a lower LIFO charge, and interest expense rose sharply to **$13.8 million** due to increased debt and rates - For the six months ended Sep 30, 2023, the net sales increase of **$1.1 million** was due to higher selling prices contributing **$52.6 million**, offset by lower sales volumes having an unfavorable impact of **$51.5 million**[77](index=77&type=chunk) - Gross margin for the six months ended Sep 30, 2023, increased to **16.1%** from **9.2%** in the prior year, primarily due to a decrease in the LIFO charge to **$7.6 million** from **$48.4 million**[87](index=87&type=chunk) - Interest expense for the six-month period increased to **$13.8 million** from **$3.8 million** year-over-year, as a result of higher interest rates and increased borrowings[92](index=92&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity relies on cash from operations and a revolving credit facility, with operating activities using **$26.3 million** for seasonal inventory buildup, while long-term debt significantly increased to **$492.7 million** due to term loan amendments, maintaining compliance with all debt covenants - Cash used in operating activities for the six months ended Sep 30, 2023 was **$26.3 million**, primarily due to the seasonal increase in inventories[97](index=97&type=chunk) - On May 23, 2023, the company amended its Term Loan A-2, combining an existing balance with a new **$125.0 million** facility to create a single **$298.5 million** term loan[50](index=50&type=chunk) - The company utilizes a seasonally adjusted revolving credit facility of up to **$400.0 million** for working capital needs, which is secured by accounts receivable and inventories[104](index=104&type=chunk) [Non-GAAP Financial Measures](index=27&type=section&id=Non-GAAP%20Financial%20Measures) The company presents non-GAAP measures like Adjusted Net Earnings and FIFO EBITDA to enhance comparability by excluding LIFO impact, with Adjusted Net Earnings at **$53.6 million** and FIFO EBITDA at **$109.4 million** for the six months ended September 30, 2023 Reconciliation of Reported Earnings to Adjusted Net Earnings (In thousands) | Description | Six Months Ended Sep 30, 2023 | Six Months Ended Oct 1, 2022 | | :--- | :--- | :--- | | Earnings before income taxes, as reported | $62,838 | $27,725 | | LIFO charge | $7,616 | $48,435 | | **Adjusted net earnings** | **$53,610** | **$57,609** | Reconciliation of Net Earnings to FIFO EBITDA (In thousands) | Description | Six Months Ended Sep 30, 2023 | Six Months Ended Oct 1, 2022 | | :--- | :--- | :--- | | Net earnings | $47,890 | $21,234 | | EBITDA | $101,807 | $58,105 | | LIFO charge | $7,616 | $48,435 | | **FIFO EBITDA** | **$109,423** | **$106,540** | [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company reports no material changes to its market risk exposure since March 31, 2023, with key risks including raw material pricing and availability, and interest rate fluctuations impacting variable-rate debt - There have been no material changes to the Company's exposure to market risk since March 31, 2023. The company is exposed to fluctuations in interest rates, primarily related to its revolving credit facility and Amended Term Loan A-2[130](index=130&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management identified a material weakness in internal control over financial reporting related to year-end LIFO inventory valuation, with remediation efforts underway, yet concluded disclosure controls and procedures were effective as of September 30, 2023 - A material weakness was identified in the Company's internal control over financial reporting relating to the accounting for valuing inventory using the LIFO method, specifically regarding the review controls for a year-end adjustment[132](index=132&type=chunk) - Remedial actions include implementing new controls to reconcile inventory quantities and utilizing new software with analytical features to perform the LIFO calculation[135](index=135&type=chunk) - The Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2023, the company's disclosure controls and procedures were effective[134](index=134&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, none of which are expected to have a material adverse impact on its financial position, results of operations, or cash flows - In the ordinary course of its business, the Company is made a party to certain legal proceedings but does not believe that an adverse decision would have a material adverse impact on its financial position, results of operations, or cash flows[68](index=68&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended March 31, 2023 - There have been no material changes to the risk factors disclosed in the Company's Annual Report Form 10-K for the period ended March 31, 2023[137](index=137&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 FY2024, the company repurchased **343,081 shares** of Class A Common Stock at an average price of **$51.03** per share, and the Board increased the stock repurchase authorization to **2,500,000 shares** Share Repurchases (Q2 FY2024) | Period | Class A Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jul 2023 | - | - | | Aug 2023 | 161,485 | $49.44 | | Sep 2023 | 181,596 | $52.44 | | **Total** | **343,081** | **$51.03** | - On August 9, 2023, the Board of Directors approved an amendment to the stock repurchase program, increasing the maximum number of shares to be repurchased to **2,500,000**[141](index=141&type=chunk) [Other Information](index=34&type=section&id=Item%205.%20Other%20Information) During the quarter ended September 30, 2023, no director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - During the quarterly period ended September 30, 2023, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement[142](index=142&type=chunk) [Exhibits](index=34&type=section&id=Item%206.%20Exhibits) The report includes required exhibits, such as CEO and CFO certifications under Sarbanes-Oxley Act and Inline XBRL financial data files - Exhibits filed with the report include certifications from the CEO and CFO under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as Inline XBRL documents[143](index=143&type=chunk)