Seneca(SENEA) - 2025 Q2 - Quarterly Report

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]