Feb. 1, 2019 | Earnings Reports
Seneca Foods Corporation (NASDAQ: SENEA, SENEB) today announced financial results for the third quarter and nine months ended December 29, 2018.
Highlights (vs. year-ago, year-to-date results):
- Net sales increased 1.4% to $937.0 million.
- Gross margin percentage from continuing operations income decreased from 6.9% to 2.8% as compared to the prior year nine months. Cost increases and a $39.9 million LIFO charge all contributed to the lower gross margin percentage.
- The Company has applied discontinued operations treatment as related to its Modesto operations.
- Net earnings from discontinued operations increased by $46.1 million as compared to the prior nine months. Included in the nine months ended December 29, 2018 discontinued operations was a $24.2 million pre-tax noncash gain as result of the Modesto LIFO layer liquation and a pre-tax cash gain of $51.5 million on the sale of the Modesto plant and equipment.
“The first nine months of Fiscal Year 2019 was a challenge for us. Our business faced meaningful costs increases due to higher steel and transportation costs. When coupled with poor growing conditions during the 2018 growing season, the Company ended up with a year to date non-cash LIFO charge of almost $40 million related to its continuing operations as inventory costs for the fiscal year rose significantly. When combined with fixed annual pricing commitments to much of our customer base, this has resulted in a significant squeeze on earnings. The Modesto peach plant liquidation activities are coming to an end. The sale of the facility in the third quarter has enabled the Company to pay down a significant amount of debt and generate sizable one-time gains.”
- Kraig Kayser, President and Chief Executive Officer
Highlights (vs. year-ago, third quarter results):
- Net sales increased 4.9% to $372.2 million.
- Gross margin percentage from continuing operations decreased from 8.1% to (0.4) % as compared to the prior third quarter. Cost increases and a $25.8 million LIFO charge all contributed to the lower gross margin percentage.
- Net earnings from discontinued operation increased by $35.2 million as compared to the prior third quarter. Included in the third quarter ended December 29, 2018 for discontinued operations is a pre-tax cash gain of $50.4 million on the sale of the Modesto plant and equipment.