Seneca(US:SENEA)2026-02-05 21:14Financial Performance - Net sales for the three months ended December 27, 2025, totaled $508.3 million, an increase of $5.4 million or 1.1% compared to $502.9 million for the same period in 2024[91] - Net sales for the nine months ended December 27, 2025, were $1,265.8 million, an increase of $32.8 million or 2.7% compared to $1,233.0 million for the same period in 2024[94] - Gross margin for the three months ended December 27, 2025, was 16.4%, up from 9.8% in the prior year, primarily due to a LIFO credit and lower costs of current year seasonal pack products[97] - Gross margin for the nine months ended December 27, 2025, was 14.8%, up from 10.9% in the prior year, driven by increased net sales and a LIFO credit[102] - Adjusted net earnings for the nine months ended December 27, 2025, were $72.7 million, compared to $58.0 million for the same period in 2024[124] - EBITDA for the nine months ended December 27, 2025, was $167.2 million, an increase from $117.3 million in the same period of 2024[127] Operating Income and Expenses - Operating income as a percentage of net sales increased to 11.8% for the three months ended December 27, 2025, compared to 5.1% for the same period in 2024[96] - Selling, general, and administrative expenses as a percentage of net sales for the nine months ended December 27, 2025, were 5.0%, compared to 4.7% for the prior year[103] - Interest expense decreased from $7.8 million in the prior year quarter to $4.1 million, representing 0.8% of net sales, down from 1.6%[101] Cash Flow and Working Capital - For the nine months ended December 27, 2025, cash provided by operating activities was $114.2 million, a decrease from $243.6 million in the same period of 2024[114] - The net cash used in investing activities for the nine months ended December 27, 2025, was $26.5 million, primarily for capital expenditures of $27.0 million[117] - Net cash used in financing activities was $104.7 million for the nine months ended December 27, 2025, mainly due to payments of $94.0 million on term loans[119] - The company's working capital increased to $616.8 million as of December 27, 2025, from $579.2 million in the prior year[108] - The Company experienced an easing of working capital needs in fiscal year 2025, although adverse weather conditions impacted crop yields[111] Market Conditions and Challenges - The company faces rising costs and availability issues for raw materials, including fruits, vegetables, steel, and labor[134] - Crude oil prices are impacting distribution, packaging, and energy costs[134] - The company is experiencing an overall labor shortage, affecting recruitment and retention of employees[134] - There is a need for successful implementation of sales price increases and cost-saving measures to offset rising costs[134] - Competition and changes in consumer preferences are affecting demand for the company's products[134] - The company is at risk of losing significant customers or experiencing substantial reductions in orders[134] Strategic Initiatives - The Company believes its operations and existing liquidity sources will satisfy cash requirements for at least the next twelve months[113] - The Company utilized its Receivables Purchase Program to manage short-term liquidity and provide working capital flexibility[109] - The Company plans to seek strategic acquisitions to leverage existing capabilities and further build upon its business[109] - The ability to integrate acquisitions into operations is crucial for the company's expansion strategy[134] Regulatory and Financial Risks - The effective tax rate for the nine months ended December 27, 2025, was 23.6%, up from 23.2% in the prior year, primarily due to lower federal credits and higher earnings[107] - The company is exposed to fluctuations in interest rates related to its revolving credit facility and Amended Term Loan A-2[135] - The company utilizes both fixed and variable interest rate debt to manage interest rate risk[135] - Compliance with U.S., foreign, and local governmental regulations remains a significant concern for the company[134]