Seneca(US:SENEA)2025-11-05 21:13Financial Performance - Net sales for the three months ended September 27, 2025, totaled $460.0 million, an increase of $34.5 million or 8.1% compared to $425.5 million for the same period in 2024[84]. - For the six months ended September 27, 2025, net sales reached $757.5 million, reflecting a $27.3 million increase or 3.7% from $730.2 million in the prior year[87]. - Gross margin improved to 13.4% for the three months ended September 27, 2025, up from 10.1% in the same quarter of 2024, primarily due to a LIFO credit[90]. - Operating income as a percentage of net sales increased to 9.0% for the three months ended September 27, 2025, compared to 5.8% for the same period in 2024[89]. - The Company reported adjusted net earnings of $23.97 million for the six months ended September 27, 2025, compared to $35.07 million for the same period in 2024[118][119]. - EBITDA for the six months ended September 27, 2025, was $92.64 million, an increase from $77.66 million in the same period of 2024[121]. Cash Flow and Working Capital - For the six months ended September 27, 2025, cash provided by operating activities was $83.0 million, down from $125.9 million in the same period of 2024[108][109]. - The net cash used in investing activities for the six months ended September 27, 2025, was $18.6 million, primarily for capital expenditures[111]. - Net cash used in financing activities was $96.7 million for the six months ended September 27, 2025, mainly due to term loan payments and treasury stock purchases[113]. - Working capital decreased to $575.9 million as of September 27, 2025, from $669.9 million a year earlier[101]. - The current ratio was 2.59 as of September 27, 2025, compared to 2.64 in the prior year[101]. - The Company experienced an easing of working capital needs in fiscal year 2025, but adverse weather conditions led to reduced crop yields and a smaller seasonal pack, resulting in higher costs per unit[105]. - The production cycle is highly seasonal, with the majority of inventories produced from June through November, impacting cash flow and working capital needs[110][115]. Costs and Expenses - Interest expense decreased significantly from $9.0 million in the prior year quarter to $4.7 million in the current quarter, representing 1.0% of net sales[94]. - The effective tax rate for the six months ended September 27, 2025, was 23.6%, up from 22.7% in the prior year, primarily due to lower federal credits[100]. - The company experienced material cost increases due to supply chain disruptions and raw material shortages, although some factors have started to stabilize[81]. - The Company has increased steel coil purchases to mitigate supply chain challenges and inflationary pressures, impacting overall costs[104]. - The company faces rising costs and availability issues for raw materials, including fruits, vegetables, steel, and packaging[127]. - Crude oil prices are impacting distribution, packaging, and energy costs[127]. Strategic Initiatives - The company is exploring strategic acquisitions to leverage existing capabilities and enhance its business operations[103]. - The Company believes its operations and existing liquidity sources will satisfy cash requirements for at least the next twelve months[107]. - The company is managing interest rate risk through a combination of fixed and variable interest rate debt[128]. Risks and Challenges - The company is experiencing an overall labor shortage, affecting recruitment and retention of employees[127]. - There are risks associated with the expansion of the business and the integration of acquisitions into operations[127]. - The company is exposed to fluctuations in interest rates related to its revolving credit facility and Amended Term Loan A-2[128]. - The effectiveness of marketing and trade promotion programs is crucial for maintaining customer demand[127]. - The company must navigate changes in consumer preferences and local economic conditions[127]. - There are potential impacts from tariffs and governmental trade restrictions on operations[127]. - Compliance with U.S., foreign, and local governmental regulations is essential to avoid disruptions in operations[127].