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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

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

   

350 WillowBrook Office Park, Fairport, New York

14450

(Address of principal executive offices)

(Zip code)

 

(585) 495-4100

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Exchange on

Which Registered

Common Stock Class A, $.25 Par

SENEA

NASDAQ Global Select Market

Common Stock Class B, $.25 Par

SENEB

NASDAQ Global Select Market

 

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

 

If an emerging growth company, indicate by checkmark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act ☐

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

The number of shares outstanding of each of the Registrant’s classes of common stock as of January 26, 2024, are as follows:

 

Class

Shares Outstanding

Common Stock Class A, $0.25 Par

5,456,549

Common Stock Class B, $0.25 Par

1,660,953

 

 

 

 

Seneca Foods Corporation

Quarterly Report on Form 10-Q

Table of Contents

 

PART I.  FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Condensed Consolidated Balance Sheets (Unaudited)

1

Condensed Consolidated Statements of Net Earnings (Unaudited)

2

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

2

Condensed Consolidated Statements of Cash Flows (Unaudited)

3

Condensed Consolidated Statements of Stockholders' Equity (Unaudited)

4

Notes to Condensed Consolidated Financial Statements (Unaudited)

5

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3. Quantitative and Qualitative Disclosures about Market Risk

23

Item 4. Controls and Procedures

23

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

24

Item 1A. Risk Factors

24

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

24

Item 3. Defaults Upon Senior Securities

24

Item 4. Mine Safety Disclosures

24

Item 5. Other Information

25

Item 6. Exhibits

25

SIGNATURES

26

  







 

 

 

SENECA FOODS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

 

   

 

   

 

         
   

December 30,
2023

   

December 31,
2022

   

March 31,
2023

 

Assets

                       

Current assets:

                       

Cash and cash equivalents

  $ 7,168     $ 5,579     $ 5,236  

Restricted cash

    7,251       6,937       7,020  

Accounts receivable, net of allowance for credit losses of $51, $77 and $34, respectively

    89,928       94,947       97,101  

Inventories

    968,889       774,121       670,898  

Refundable income taxes

    1,153       -       6,976  

Other current assets

    3,906       5,898       6,808  

Total current assets

    1,078,295       887,482       794,039  

Property, plant and equipment, net

    307,714       297,676       301,212  

Right-of-use assets operating, net

    20,538       26,012       23,235  

Right-of-use assets financing, net

    23,146       33,882       33,571  

Pension assets

    59,003       51,786       59,304  

Other assets

    841       1,670       1,360  

Total assets

  $ 1,489,537     $ 1,298,508     $ 1,212,721  
                         
                         

Liabilities and Stockholders' Equity

                       

Current liabilities:

                       

Accounts payable

  $ 125,182     $ 156,065     $ 69,232  

Deferred revenue

    8,708       14,412       9,956  

Accrued vacation

    10,997       11,682       11,143  

Accrued payroll

    13,083       12,469       16,772  

Other accrued expenses

    29,530       26,921       23,293  

Income taxes payable

    5,967       2,427       -  

Current portion of long-term debt and lease obligations

    30,582       21,344       25,792  

Total current liabilities

    224,049       245,320       156,188  

Long-term debt, less current portion

    611,349       399,948       432,695  

Operating lease obligations, less current portion

    13,617       17,219       16,675  

Financing lease obligations, less current portion

    13,102       17,382       17,293  

Deferred income tax liability, net

    30,820       34,434       31,481  

Other liabilities

    3,162       3,933       3,639  

Total liabilities

    896,099       718,236       657,971  

Commitments and contingencies

                          

Stockholders' equity:

                       

Preferred stock

    351       607       351  

Common stock, $0.25 par value per share

    3,050       3,043       3,049  

Additional paid-in capital

    99,430       98,862       99,152  

Treasury stock, at cost

    (195,706 )     (170,088 )     (168,573 )

Accumulated other comprehensive loss

    (20,488 )     (26,468 )     (20,488 )

Retained earnings

    706,801       674,316       641,259  

Total stockholders' equity

    593,438       580,272       554,750  

Total liabilities and stockholders’ equity

  $ 1,489,537     $ 1,298,508     $ 1,212,721  

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

1

 

 

SENECA FOODS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF NET EARNINGS

(In thousands, except per share data)

(Unaudited)

 

   

Three Months Ended

    Nine Months Ended  
   

December 30,
2023

   

December 31,
2022

   

December 30,
2023

   

December 31,
2022

 

Net sales

  $ 444,481     $ 473,254     $ 1,150,620     $ 1,178,289  
                                 

Costs and expenses:

                               

Cost of product sold

    390,448       419,465       983,180       1,059,878  

Selling, general and administrative

    22,921       21,914       63,801       60,636  

Plant restructuring

    (42 )     1,829       107       1,937  

Other operating expense (income), net

    392       229       (1,151 )     (2,411 )

Total costs and expenses

    413,719       443,437       1,045,937       1,120,040  

Operating income

    30,762       29,817       104,683       58,249  

Other income and expenses:

                               

Other non-operating income

    (1,825 )     (2,017 )     (4,500 )     (5,070 )

Interest expense, net

    9,388       4,277       23,146       8,037  

Earnings before income taxes

    23,199       27,557       86,037       55,282  

Income taxes

    5,524       6,503       20,472       12,994  

Net earnings

  $ 17,675     $ 21,054     $ 65,565     $ 42,288  
                                 

Earnings per share:

                               

Basic

  $ 2.47     $ 2.77     $ 8.86     $ 5.36  

Diluted

  $ 2.45     $ 2.74     $ 8.78     $ 5.31  
                                 

Weighted average common shares outstanding:

                               

Basic

    7,131       7,582       7,391       7,858  

Diluted

    7,202       7,655       7,462       7,931  

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

SENECA FOODS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

 

   

Three Months Ended

   

Nine Months Ended

 
   

December 30,
2023

   

December 31,
2022

   

December 30,
2023

   

December 31,
2022

 
                                 

Comprehensive income:

                               

Net earnings

  $ 17,675     $ 21,054     $ 65,565     $ 42,288  

Total

  $ 17,675     $ 21,054     $ 65,565     $ 42,288  

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

2

 

 

SENECA FOODS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

   

Nine Months Ended

 
   

December 30,
2023

   

December 31,
2022

 

Cash flows from operating activities:

               

Net earnings

  $ 65,565     $ 42,288  

Adjustments to reconcile net earnings to net cash from operating activities:

               

Depreciation and amortization

    38,070       39,721  

LIFO charge

    19,643       79,333  

Gain on the sale of assets

    (1,843 )     (2,191 )

Deferred income taxes

    (661 )     1,418  
Stock-based compensation expense     207       109  
Pension expense     300       1,110  

Changes in operating assets and liabilities:

               

Accounts receivable

    7,173       24,722  

Inventories

    (317,634 )     (449,459 )

Other current assets

    (1,112 )     910  

Income taxes

    11,790       7,873  

Accounts payable

    55,950       68,463  

Accrued expenses and other

    (5,574 )     (3,777 )

Net cash used in operating activities

    (128,126 )     (189,480 )

Cash flows from investing activities:

               

Additions to property, plant and equipment

    (31,843 )     (56,509 )

Proceeds from the sale of assets

    7,987       5,013  

Net cash used in investing activities

    (23,856 )     (51,496 )

Cash flows from financing activities:

               

Borrowings under revolving credit facility

    657,476       783,346  

Repayments under revolving credit facility

    (579,966 )     (490,046 )

Borrowings under term loans

    124,433       -  

Principal payments on term loans

    (14,252 )     (2,976 )

Payments on financing leases

    (6,401 )     (6,515 )

Purchase of treasury stock

    (27,133 )     (41,209 )

Dividends

    (12 )     (12 )

Net cash provided by financing activities

    154,145       242,588  
                 

Net increase in cash, cash equivalents and restricted cash

    2,163       1,612  

Cash, cash equivalents and restricted cash, beginning of the period

    12,256       10,904  

Cash, cash equivalents and restricted cash, end of the period

  $ 14,419     $ 12,516  
                 

Supplemental disclosures of cash flow information:

               

Cash paid for:

               

Interest, net of capitalized interest

  $ 22,112     $ 7,228  

Income taxes

  $ 8,791     $ 3,082  

Noncash transactions:

               

Right-of-use assets obtained in exchange for lease obligations

  $ 4,268     $ 8,237  

Right-of-use assets derecognized upon early lease termination

  $ 2,392     $ 2,874  

Assets acquired from exercise of finance lease purchase options, net of accumulated depreciation

  $ 5,183     $ -  

Property, plant and equipment purchased on account

  $ 95     $ 970  

Sale of property, plant and equipment in exchange for note receivable

  $ -     $ 750  

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

3

 

 

SENECA FOODS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)

 

                                   

Accumulated

         
                   

Additional

           

Other

         
   

Preferred

   

Common

   

Paid-In

   

Treasury

   

Comprehensive

   

Retained

 
   

Stock

   

Stock

   

Capital

   

Stock

   

Loss

   

Earnings

 

First Quarter FY 2024:

                                               

Balances, March 31, 2023

  $ 351     $ 3,049     $ 99,152     $ (168,573 )   $ (20,488 )   $ 641,259  

Net earnings

    -       -       -       -       -       23,111  

Cash dividends declared on preferred stock

    -       -       -       -       -       (12 )

Issue stock for bonus program

    -       -       72       -       -       -  

Equity incentive program

    -       -       80       -       -       -  

Purchase treasury stock

    -       -       -       (2,177 )     -       -  

Balances, July 1, 2023

  $ 351     $ 3,049     $ 99,304     $ (170,750 )   $ (20,488 )   $ 664,358  
                                                 

Second Quarter FY 2024:

                                               

Net earnings

    -       -       -       -       -       24,779  

Equity incentive program

    -       1       88       -       -       -  

Purchase treasury stock

    -       -       -       (17,467 )     -       -  

Balances, September 30, 2023

  $ 351     $ 3,050     $ 99,392     $ (188,217 )   $ (20,488 )   $ 689,137  
                                                 

Third Quarter FY 2024:

                                               

Net earnings

    -       -       -       -       -       17,675  

Cash dividends declared on preferred stock

    -       -       -       -       -       (11 )

Equity incentive program

    -       -       38       -       -       -  

Purchase treasury stock

    -       -       -       (7,489 )     -       -  

Balances, December 30, 2023

  $ 351     $ 3,050     $ 99,430     $ (195,706 )   $ (20,488 )   $ 706,801  
                                                 
                                                 

First Quarter FY 2023:

                                               

Balances, March 31, 2022

  $ 644     $ 3,041     $ 98,641     $ (128,879 )   $ (26,468 )   $ 632,051  

Net earnings

    -       -       -       -       -       5,103  

Cash dividends declared on preferred stock

    -       -       -       -       -       (12 )

Issue stock for bonus program

    -       1       76       -       -       -  

Equity incentive program

    -       -       33       -       -       -  

Purchase treasury stock

    -       -       -       (15,923 )     -       -  

Balances, July 2, 2022

  $ 644     $ 3,042     $ 98,750     $ (144,802 )   $ (26,468 )   $ 637,142  
                                                 

Second Quarter FY 2023:

                                               

Net earnings

    -       -       -       -       -       16,131  

Equity incentive program

    -       -       37       -       -       -  

Preferred stock conversion

    (32 )     1       31       -       -       -  

Purchase treasury stock

    -       -       -       (21,069 )     -       -  

Balances, October 1, 2022

  $ 612     $ 3,043     $ 98,818     $ (165,871 )   $ (26,468 )   $ 653,273  
                                                 

Third Quarter FY 2023:

                                               

Net earnings

    -       -       -       -       -       21,054  

Cash dividends declared on preferred stock

    -       -       -       -       -       (11 )

Equity incentive program

    -       -       39       -       -       -  

Preferred stock conversion

    (5 )     -       5       -       -       -  

Purchase treasury stock

    -       -       -       (4,217 )     -       -  

Balances, December 31, 2022

  $ 607     $ 3,043     $ 98,862     $ (170,088 )   $ (26,468 )   $ 674,316  

 

   

6% Voting

   

10% Voting

                         
   

Cumulative

   

Cumulative

   

Participating

   

Class A

   

Class B

 
   

Callable

   

Convertible

   

Convertible

   

Common

   

Common

 
   

Par $0.25

   

Par $0.025

   

Par $0.025

   

Par $0.25

   

Par $0.25

 

Shares authorized and designated:

                                       

December 30, 2023

    200,000       1,400,000       8,292       20,000,000       10,000,000  

Shares outstanding:

                                       

December 30, 2023

    200,000       807,240       8,292       5,456,549       1,660,953  

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

  

4

 
SENECA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(Unaudited)

 

 

1.

Basis of Preparation and Presentation

 

Seneca Foods Corporation (the “Company”) is a leading provider of packaged fruits and vegetables with 26 facilities in eight states in support of its operations. The Company’s principal products include canned vegetables, frozen vegetables, jarred fruit, and other food products. The products are sold nationwide by major grocery outlets, including supermarkets, mass merchandisers, limited assortment stores, club stores and dollar stores. Additionally, products are sold to food service distributors, restaurant chains, industrial markets, other food packagers, export customers in approximately 60 countries, and federal, state and local governments for school and other food programs.

 

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

 

The unaudited condensed consolidated financial statements included herein have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial statements. While these statements reflect all adjustments (consisting of items of a normal recurring nature) that are, in the opinion of management, necessary for a fair presentation of the results of the interim period, they do not include all of the information and footnotes required by United States generally accepted accounting principles (“U.S. GAAP”) for complete financial statement presentation. The condensed consolidated financial statements should be read in conjunction with the financial statement disclosures in the Company’s Annual Report on Form 10-K/A (Amendment No. 1) for the fiscal year ended March 31, 2023.

 

Due to the seasonal nature of the business, quarterly operating results and cash flows are not necessarily indicative of the results that may be expected for other interim periods or the full year. All references to years are fiscal years ended or ending March 31 unless otherwise indicated. Certain percentage tables may not foot due to rounding. 

 

The preparation of financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors that management believes to be reasonable under the circumstances, including the current economic environment. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Actual results could differ materially from those estimates.

 

The Company uses the same accounting policies in preparing quarterly and annual financial statements. A summary of significant accounting policies followed by the Company are set forth in Note 1 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K/A (Amendment No. 1) for the fiscal year ended March 31, 2023.

 

Reclassifications—Certain prior year amounts have been reclassified for consistency with the current year presentation within the condensed consolidated financial statements. There was no impact to any totals or subtotals previously reported on the condensed consolidated financial statements as a result of the reclassifications. In addition, the Company’s condensed consolidated balance sheet as of  December 31, 2022 has been adjusted to reflect the beginning balance of certain items in accordance with the restated March 31, 2022 consolidated balance sheet shown on the Company’s Annual Report on Form 10-K/A (Amendment No. 1) that was filed with SEC on July 31, 2023.

 

5

 
SENECA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(Unaudited)
 

Recently Issued Accounting Pronouncements

 

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”) related to income tax disclosures. The amendments in this update are intended to enhance the transparency and decision usefulness of income tax disclosures primarily through changes to the rate reconciliation and income taxes paid information. This update is effective for annual periods beginning after December 15, 2024, though early adoption is permitted. The Company plans to adopt this pronouncement for its fiscal year beginning April 1, 2025, and is in the process of analyzing the impact on its consolidated financial statements.

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This update is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. Early adoption is permitted. The Company plans to adopt this pronouncement for its fiscal year beginning April 1, 2024, and is in the process of analyzing the impact on its consolidated financial statements.

 

All other newly issued accounting pronouncements not yet effective have been deemed either not applicable or were related to technical amendments or codification.

 

 

2.

Revenue Recognition

 

Revenue recognition is completed for most customers at a point in time when product control is transferred to the customer. In general, control transfers to the customer when the product is shipped or delivered to the customer based upon applicable shipping terms, as the customer can direct the use and obtain substantially all of the remaining benefits from the asset at this point in time. The Company does sell certain finished goods inventory for cash on a bill and hold basis. The terms of the bill and hold agreement provide that title to the specified inventory is transferred to the customer prior to shipment and the Company has the right to payment (prior to physical delivery) which results in recorded revenue as determined under the revenue recognition standard.

 

6

 
SENECA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(Unaudited)
 

In the following table, revenue is disaggregated by product category groups (in thousands):

 

    Three Months Ended    

Nine Months Ended

 
   

December 30,

   

December 31,

   

December 30,

   

December 31,

 
   

2023

   

2022

   

2023

   

2022

 

Canned vegetables

  $ 372,690     $ 392,942     $ 952,226     $ 976,026  

Frozen vegetables

    27,454       33,754       92,039       93,560  

Fruit products

    32,022       33,371       71,561       75,674  

Snack products

    3,463       3,360       10,817       10,035  

Other

    8,852       9,827       23,977       22,994  
    $ 444,481     $ 473,254     $ 1,150,620     $ 1,178,289  

 

As a result of certain contracts with customers, the Company has contract asset balances of $0.5 million, $0.7 million, and $0.6 million as of December 30, 2023, December 31, 2022, and March 31, 2023, respectively, which are included in other current assets on the condensed consolidated balance sheets. The Company records deferred revenue for prepaid case and labeling and storage services which have been collected from bill and hold sales. Amounts are recognized in revenue as the associated performance obligation is satisfied and control has transferred to the customer.

 

 

3.

Earnings per Common Share

 

Earnings per share for the three and nine months ended December 30, 2023 and December 31, 2022 are as follows (in thousands, except per share amounts):

 

    Three Months Ended     Nine Months Ended  
   

December 30,

   

December 31,

   

December 30,

   

December 31,

 
   

2023

   

2022

   

2023

   

2022

 

Basic

                               

Net earnings

  $ 17,675     $ 21,054     $ 65,565     $ 42,288  

Deduct preferred stock dividends paid

    6       6       17       17  

Undistributed net earnings

    17,669       21,048       65,548       42,271  

Earnings attributable to participating preferred shareholders

    21       82       73       169  

Earnings attributable to common shareholders

  $ 17,648     $ 20,966     $ 65,475     $ 42,102  
                                 

Weighted average common shares outstanding

    7,131       7,582       7,391       7,858  
                                 

Basic earnings per common share

  $ 2.47     $ 2.77     $ 8.86     $ 5.36  
                                 

Diluted

                               

Earnings attributable to common shareholders

  $ 17,648     $ 20,966     $ 65,475     $ 42,102  

Add dividends on convertible preferred stock

    5       5       15       15  

Earnings attributable to common stock on a diluted basis

  $ 17,653     $ 20,971     $ 65,490     $ 42,117  

Weighted average common shares outstanding-basic

    7,131       7,582       7,391       7,858  

Additional shares issued related to the equity compensation plan

    4       6       4       6  

Additional shares to be issued under full conversion of preferred stock

    67       67       67       67  

Total shares for diluted

    7,202       7,655       7,462       7,931  
                                 

Diluted earnings per common share

  $ 2.45     $ 2.74     $ 8.78     $ 5.31  

 

7

 
SENECA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(Unaudited)

 

 

4.

Inventories

 

The Company uses the last-in, first-out (“LIFO”) method of valuing inventory. An actual valuation of inventory under the LIFO method is made at the end of each fiscal year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels, production pack yields, sales and the expected rate of inflation or deflation for the year. The interim LIFO calculations are subject to adjustment in the final year-end LIFO inventory valuation.

 

As of December 30, 2023, December 31, 2022, and March 31, 2023, first-in, first-out (“FIFO”) based inventory costs exceeded LIFO based inventory costs, resulting in a LIFO reserve of $322.1 million, $250.2 million, and $302.4 million, respectively. In order to state inventories at LIFO, the Company recorded an increase to cost of products sold of $12.0 million and $30.9 million for the three months ended December 30, 2023 and December 31, 2022, respectively, and an increase to cost of products sold of $19.6 million and $79.3 million for the nine months ended December 30, 2023 and December 31, 2022, respectively.

 

The following table shows inventory by category and the related LIFO reserve (in thousands): 

 

   

As of:

 
   

December 30,

   

December 31,

   

March 31,

 
   

2023

   

2022

   

2023

 

Finished products

  $ 912,430     $ 738,331       613,622  

In process

    111,939       67,380       75,123  

Raw materials and supplies

    266,603       218,572       284,593  
      1,290,972       1,024,283       973,338  

Less excess of FIFO cost over LIFO cost

    322,083       250,162       302,440  

Total inventories

  $ 968,889     $ 774,121     $ 670,898  

 

 

5.

Property, Plant and Equipment

 

Property, plant and equipment is comprised of the following (in thousands): 

 

   

As of:

 
   

December 30,

   

December 31,

   

March 31,

 
   

2023

   

2022

   

2023

 
                         

Land and land improvements

  $ 48,401     $ 46,832     $ 46,978  

Buildings and improvements

    233,255       210,991       214,110  

Machinery and equipment

    444,709       423,901       421,067  

Office furniture, vehicles and computer software

    13,934       11,397       11,738  

Construction in progress

    27,703       46,395       40,539  

Property, plant and equipment, cost

    768,002       739,516       734,432  

Less: accumulated depreciation

    (460,288 )     (441,840 )     (433,220 )

Property, plant and equipment, net

  $ 307,714     $ 297,676     $ 301,212  

 

Depreciation expense totaled $9.3 million and $8.7 million for the three months ended December 30, 2023 and December 31, 2022, respectively. For the nine months ended December 30, 2023 and December 31, 2022, depreciation expense totaled $27.4 million and $25.1 million, respectively.

 

8

 
SENECA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(Unaudited)

 

 

6.

Long-Term Debt

 

Long-term debt is comprised of the following (in thousands):

 

    As of:  
   

December 30,

   

December 31,

   

March 31,

 
   

2023

   

2022

   

2023

 

Revolving credit facility

  $ 258,108     $ 313,808     $ 180,598  
                         

Term loans

                       

Term Loan A-1

                       

Outstanding principal

    86,000       90,000       89,000  

Unamortized debt issuance costs

    (45 )     (76 )     (68 )

Term Loan A-1, net

    85,955       89,924       88,932  
                         

Term Loan A-2

                       

Outstanding principal

    287,250       -       173,500  

Unamortized debt issuance costs

    (964 )     -       (551 )

Term Loan A-2, net

    286,286       -       172,949  
                         

Other

    214       216       216  

Total long-term debt

    630,563       403,948       442,695  

Less current portion

    19,214       4,000       10,000  

Long-term debt, less current portion

  $ 611,349     $ 399,948     $ 432,695  

 

Revolving Credit Facility

 

On March 24, 2021, the Company entered into a Fourth Amended and Restated Loan and Security Agreement that provides for a senior revolving credit facility of up to $400.0 million that is seasonally adjusted (the “Revolver”). Maximum borrowings under the Revolver total $300.0 million from April through July and $400.0 million from August through March. The Revolver balance is included in Long-Term Debt in the accompanying condensed consolidated balance sheets due to the Revolver’s March 24, 2026 maturity. In order to maintain availability of funds under the facility, the Company pays a commitment fee on the unused portion of the Revolver. The Revolver is secured by substantially all of the Company’s accounts receivable and inventories and contains borrowing base requirements as well as a financial covenant, if certain circumstances apply. The Company utilizes its Revolver for general corporate purposes, including seasonal working capital needs, to pay debt principal and interest obligations, and to fund capital expenditures and acquisitions.

 

Seasonal working capital needs are affected by the growing cycles of the vegetables the Company packages. The majority of vegetable inventories are produced during the months of June through November and are then sold over the following year. Payment terms for vegetable produce are generally three months but can vary from a few days to seven months. Accordingly, the Company’s need to draw on the Revolver may fluctuate significantly throughout the year.

 

On September 14, 2022, the Company entered into a First Amendment to the Fourth Amended and Restated Loan and Security Agreement (the “Revolver Amendment”) which amended several provisions to replace LIBOR with SOFR plus a spread adjustment as the interest rate benchmark on the Revolver. The transition to SOFR did not materially impact the interest rates applied to the Company’s borrowings. No other material changes were made to the terms of the Company’s Revolver as a result of the Revolver Amendment.

 

9

 
SENECA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(Unaudited)
 

The following table illustrates certain quantitative data for Revolver borrowings during fiscal year 2024 and fiscal year 2023 (in thousands): 

 

   

As of:

 
   

December 30,

   

December 31,

   

March 31,

 
   

2023

   

2022

   

2023

 

Outstanding borrowings

  $ 258,108     $ 313,808     $ 180,598  

Weighted average interest rate

    6.70 %     5.85 %     6.34 %

 

    Three Months Ended:     Nine Months Ended:  
   

December 30,

   

December 31,

   

December 30,

   

December 31,

 
   

2023

   

2022

   

2023

   

2022

 

Maximum amount of borrowings

  $ 275,912     $ 327,881     $ 275,912     $ 327,881  

Average outstanding borrowings

  $ 210,034     $ 269,833     $ 131,346     $ 140,996  

Weighted average interest rate

    6.76 %     5.11 %     6.77 %     4.50 %

 

 

Term Loans

 

On May 28, 2020, the Company entered into an Amended and Restated Loan and Guaranty Agreement with Farm Credit East, ACA that provides for a $100.0 million unsecured term loan. The amended and restated agreement has a maturity date of June 1, 2025 and converted the term loan to a fixed interest rate of 3.3012% until maturity in addition to requiring quarterly principal payments of $1.0 million, which commenced during fiscal year 2021. This agreement contains certain covenants, including maintaining a minimum EBITDA and minimum tangible net worth.

 

On January 20, 2023, the Company entered into a Second Amended and Restated Loan and Guaranty Agreement with Farm Credit East, ACA (the “Agreement”) which governs two term loans, as summarized below:

 

Term Loan A-1: The Agreement continues certain aspects of the existing $100.0 million term loan described above, namely Term Loan A-1 will continue to bear interest at a fixed interest rate of 3.3012%, mature on June 1, 2025, require quarterly principal payments of $1.0 million, and remain unsecured.

 

Term Loan A-2: The Agreement adds an additional term loan in the amount of $175.0 million that will mature on January 20, 2028, and is secured by a portion of the Company’s property, plant and equipment. Term Loan A-2 bears interest at a variable interest rate based upon SOFR plus an additional margin determined by the Company’s leverage ratio. Quarterly payments of principal outstanding on Term Loan A-2 in the amount of $1.5 million commenced on March 1, 2023.

 

On May 23, 2023, the Agreement was amended by the Second Amended and Restated Loan and Guaranty Agreement Amendment which amends, restates and replaces in its entirety Term Loan A-2 (the “Amendment”). The Amendment provides a single advance term facility in the principal amount of $125.0 million to be combined with the outstanding principal balance of $173.5 million on Term Loan A-2 into one single $298.5 million term loan (“Amended Term Loan A-2”). Amended Loan Term A-2 is secured by a portion of the Company’s property, plant and equipment and bears interest at a variable interest rate based upon SOFR plus an additional margin determined by the Company’s leverage ratio. Quarterly payments of principal outstanding on Amended Term Loan A-2 in the amount of $3.75 million commenced on June 1, 2023. The Amendment continues all aspects of Term Loan A-1 as defined in the Agreement. As of December 30, 2023, the interest rate on Amended Term Loan A-2 was 7.10%.

 

The Amendment contains restrictive covenants usual and customary for loans of its type, in addition to financial covenants including minimum EBITDA and minimum tangible net worth. In connection with Amended Term Loan A-2, the Company incurred $1.1 million of financing costs which will be deferred and amortized over the life of the term loan.

 

As of December 30, 2023, the Company was in compliance with all covenants for its revolving credit facility and term loan agreements.

 

10

 
SENECA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(Unaudited)

 

 

7.

Leases

 

The Company determines whether an arrangement is a lease at inception of the agreement. Presently, the Company leases land, machinery and equipment under various operating and financing leases.

 

Right-of-Use (“ROU”) assets represent the Company’s right to use the underlying assets for the lease term, and lease obligations represent the net present value of the Company’s obligation to make payments arising from these leases. ROU assets and lease obligations are recognized at commencement date based on the present value of lease payments over the lease term using the implicit lease interest rate or, when unknown, an incremental borrowing rate based on the information available at commencement date or April 1, 2019 for leases that commenced prior to that date.

 

Lease terms may include options to extend or terminate the lease, and the impact of these options are included in the calculation of the ROU asset and lease obligation only when the exercise of the option is at the Company’s sole discretion and it is reasonably certain that the Company will exercise that option. The Company will not separate lease and non-lease components for its leases when it is impractical to separate the two. In addition, the Company may have certain leases that have variable payments based solely on output or usage of the leased asset. These variable operating lease assets are excluded from the Company’s balance sheet presentation and expensed as incurred. Leases with an initial term of 12 months or less, or short-term leases, are not recorded on the accompanying condensed consolidated balance sheets.

 

ROU assets and lease obligations for the Company’s operating and financing leases are disclosed separately in the Company’s condensed consolidated balance sheets. The components of lease cost were as follows (in thousands):

 

    Three Months Ended     Nine Months Ended  
   

December 30,

   

December 31,

   

December 30,

   

December 31,

 
   

2023

   

2022

   

2023

   

2022

 

Lease cost:

                               

Amortization of ROU assets

  $ 1,419     $ 1,703     $ 4,903     $ 4,960  

Interest on lease liabilities

    180       239       602       720  

Finance lease cost

    1,599       1,942       5,505       5,680  

Operating lease cost

    1,919       2,926       6,077       10,810  

Total lease cost

  $ 3,518     $ 4,868     $ 11,582     $ 16,490  

 

Cash paid for amounts included in the measurement of lease liabilities:

               

Operating cash flows from finance leases

  $ 602     $ 720  

Operating cash flows from operating leases

    7,880       12,343  

Financing cash flows from finance leases

    6,401       6,515  
    $ 14,883     $ 19,578  
                 
                 

Right-of-use assets obtained in exchange for new finance lease liabilities

  $ 106     $ 4,053  

Right-of-use assets obtained in exchange for new operating lease liabilities

  $ 4,162     $ 4,184  

Weighted-average lease term (years):

               

Financing leases

    4.5       4.6  

Operating leases

    4.6       4.6  

Weighted-average discount rate (percentage):

               

Financing leases

    3.9 %     3.6 %

Operating leases

    4.7 %     4.4 %

 

11

 
SENECA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(Unaudited)
 

Undiscounted future lease payments under non-cancelable operating and financing leases, along with a reconciliation of undiscounted cash flows to operating and financing lease obligations, respectively, as of December 30, 2023 were as follows (in thousands):

 

Years ending March 31:

   

Operating

   

Financing

 

Balance of 2024

    $ 849     $ 1,713  

2025

      6,457       5,296  

2026

      4,661       4,210  

2027

      3,525       3,152  

2028

      3,269       2,774  
2029-2034       2,969       2,965  

Total minimum payment required

    $ 21,730     $ 20,110  

Less interest

      2,050       1,703  

Present value of minimum lease payments

      19,680       18,407  

Amount due within one year

      6,063       5,305  

Long-term lease obligations

    $ 13,617     $ 13,102  

 

 

8.

Income Taxes

 

The Company’s effective tax rate was 23.8% and 23.5% for the nine months ended December 30, 2023 and December 31, 2022, respectively. The effective tax rate increased in the current nine-month interim period primarily due to state rate changes having an unfavorable impact on the effective rate which increased the rate by 0.3%.

 

 

9.

Retirement Plans

 

The net periodic benefit (income) cost for the Company’s pension plan consisted of (in thousands):

 

    Three Months Ended     Nine Months Ended  
   

December 30,

   

December 31,

   

December 30,

   

December 31,

 
   

2023

   

2022

   

2023

   

2022

 

Service cost including administration

  $ 1,327     $ 1,310     $ 4,800     $ 6,180  

Interest cost

    2,914       2,193       8,550       6,941  

Expected return on plan assets

    (4,926 )     (4,027 )     (13,275 )     (12,079 )

Amortization of prior service cost

    22       22       60       68  

Amortization of net loss

    165       (205 )     165       -  

Net periodic benefit (income) cost

  $ (498 )   $ (707 )   $ 300     $ 1,110  

 

There were no pension contributions made during the nine months ended December 30, 2023 and December 31, 2022.

 

12

 
SENECA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(Unaudited)
 
 

10.

Stockholders’ Equity

 

During the nine months ended December 30, 2023, the Company repurchased 524,598 shares of its Class A Common Stock at a cost of $27.1 million, which are included in Treasury Stock. During the nine months ended December 31, 2022, the Company repurchased 766,071 shares of its Class A Common Stock at a cost of $41.2 million. The Company did not repurchase any of its Class B Common Stock in either nine-month interim period. As of December 30, 2023, there are 5,090,840 shares or $195.7 million of repurchased stock being held as Treasury Stock. These shares are not considered outstanding.

 

 

11.

Fair Value of Financial Instruments

 

Cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued expenses are reflected in the condensed consolidated balance sheets at carrying value, which approximates fair value due to the short-term maturity of these instruments.

 

On a quarterly basis, the Company estimates the fair values for financial instruments that are recorded at carrying value on the condensed consolidated balance sheets. The estimated fair value for long-term debt (classified as Level 2 in the fair value hierarchy) is determined by the quoted market prices for similar debt (comparable to the Company’s financial strength) or current rates offered to the Company for debt with the same maturities. The fair value and carrying value of the Company’s long-term debt are as follows (in thousands):

 

    As of:  
   

December 30,

   

December 31,

   

March 31,

 
   

2023

   

2022

   

2023

 

Carrying value

  $ 630,563     $ 403,948     $ 442,695  

Fair value

  $ 624,896     $ 396,408     $ 436,293  

 

 

12.

Restructuring

 

The following table summarizes the rollforward of restructuring charges recorded and the accruals established (in thousands):

 

    Restructuring Payable  
   

Severance

   

Other Costs

   

Total

 

Balance March 31, 2023

  $ 117     $ -     $ 117  

First quarter charge

    (42 )     182       140  

Second quarter charge

    -       9       9  

Third quarter charge

    -       (42 )     (42 )

Cash payments/write offs

    (75 )     (149 )     (224 )

Balance December 30, 2023

  $ -     $ -     $ -  

 

   

Severance

   

Other Costs

   

Total

 

Balance March 31, 2022

  $ -     $ -     $ -  

First quarter charge

    -       56       56  

Second quarter charge

    -       52       52  

Third quarter charge

    389       1,440       1,829  

Cash payments/write offs

    -       (1,548 )     (1,548 )

Balance December 31, 2022

  $ 389     $ -     $ 389  

 

13

 
SENECA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(Unaudited)
  

The restructuring charges pertain to the vegetable reportable segment. During the three and nine months ended December 30, 2023, respectively, the Company incurred restructuring charges primarily due to plants that were closed in previous periods. During the three and nine months ended December 31, 2022, respectively, the Company incurred restructuring charges primarily associated with ceasing production of green beans at a plant in the Northeast. The charges were comprised of severance costs and a write down of production equipment that was sold during the subsequent twelve months.

 

 

13.

Legal Proceedings and Other Contingencies

 

In the ordinary course of its business, the Company is made a party to certain legal proceedings seeking monetary damages, including proceedings involving product liability claims, workers’ compensation along with other employee claims, tort and other general liability claims, for which it carries insurance, as well as patent infringement and related litigation. The Company is in a highly regulated industry and is also periodically involved in government actions for regulatory violations and other matters surrounding the manufacturing of its products, including, but not limited to, environmental, employee, and product safety issues. While it is not feasible to predict or determine the ultimate outcome of these matters, the Company does not believe that an adverse decision in any of these legal proceedings would have a material adverse impact on its financial position, results of operations, or cash flows.

 

 

 

14.

Asset Acquisition

 

On November 8, 2023, the Company executed an Asset Purchase Agreement and associated License Agreement with B&G Foods, Inc., (the “Seller”) to acquire certain assets from the Seller relating to its Green Giant® shelf-stable vegetable product line (the “transaction”). The acquired assets include inventory and an associated license which allows the Company to manufacture, market, distribute, and sell Green Giant® shelf-stable vegetable products within the United States in perpetuity. The preliminary purchase price was approximately $55.6 million in cash and was funded from borrowings under the Company’s Revolver. The purchase price is subject to contingent consideration in the form of certain post-closing adjustments which are expected to be finalized prior to the Company’s fiscal year ending on March 31, 2024.

 

The transaction was accounted for as an asset acquisition in accordance with Accounting Standards Codification (“ASC”) 805-50, Business Combinations – Related Issues, because substantially all of the fair value of the gross assets acquired were concentrated in a singular asset, the acquired inventory, which was recorded at a value of $52.9 million. Additionally, a portion of the purchase price was used to settle preexisting liabilities of $2.7 million comprised mainly of deferred revenue for which the associated performance obligation had not yet been performed by the Company for the Seller prior to the transaction date.

 

14

 
SENECA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(Unaudited)
 
 

15.

Segment Information

 

The Company conducts its business almost entirely in food packaging with two reportable segments: vegetable and fruit/snack. The reportable segments reflect how the Company's Chief Executive Officer, who is the Chief Operating Decision Maker (“CODM”), allocates resources and evaluates performance, and how the Company's internal management financial reporting is structured. The Company's CODM evaluates the performance of these reportable segments with a focus on earnings (loss) before income taxes as the measure of segment profit or loss.

 

The other category consists of the Company's non-food operations including revenue derived from the sale of cans, ends, seed, outside revenue from the Company's trucking and aircraft operations, and certain corporate items. These ancillary activities do not qualify as an operating segment and are not eligible for aggregation with one of the identified operating segments; therefore they are combined and presented within the “other” category.

 

During the Company’s fiscal year 2024 reassessment, the Company updated how its existing operating segments (vegetable, fruit, snack) are reported. A primary factor of the reassessment was the Company's vegetable operations which have become a larger strategic focus of the Company, as evidenced by the recent asset acquisition described in Note 14 to the Condensed Consolidated Financial Statements. Fruit was previously reported with vegetable. The fruit and snack segments are now managed together as one reportable segment, leaving vegetable as its own reportable segment. The update reflects the products offered within the segments and the manner in which the business is currently managed. The prior year amounts within the segment disclosure information have been recast to conform to the current year presentation.

 

Segment information is provided on a FIFO basis which is consistent with how financial information is prepared internally and provided to the CODM. The LIFO impact on earnings (loss) before income taxes and total assets is shown separately for purposes of reconciling to the U.S. GAAP financial statement measure shown on the condensed consolidated statements of net earnings and condensed consolidated balance sheets.

 

The following table summarizes certain financial data for the Company’s reportable segments (in thousands):

 

          Three Months Ended December 30, 2023  
           

Fruit and

           

LIFO

         
   

Vegetable

   

Snack

   

Other

   

Impact

   

Total

 

Net sales

  $ 400,144     $ 35,485     $ 8,852     $ -     $ 444,481  

Earnings (loss) before income taxes

    33,304       2,217       (295 )     (12,027 )     23,199  

Total assets

    1,705,008       103,542       3,070       (322,083 )     1,489,537  
                                         

 

           Three Months Ended December 31, 2022  
           

Fruit and

           

LIFO

         
   

Vegetable

   

Snack

   

Other

   

Impact

   

Total

 

Net sales

  $ 426,696     $ 36,731     $ 9,827     $ -     $ 473,254  

Earnings (loss) before income taxes

    56,300       34       2,121       (30,898 )     27,557  

Total assets

    1,454,204       90,855       3,611       (250,162 )     1,298,508  
                                         

 

           Nine Months Ended December 30, 2023       
           

Fruit and

           

LIFO

         
   

Vegetable

   

Snack

   

Other

   

Impact

   

Total

 

Net sales

  $ 1,044,265     $ 82,378     $ 23,977     $ -     $ 1,150,620  

Earnings (loss) before income taxes

    92,461       4,416       8,803       (19,643 )     86,037  

Total assets

    1,705,008       103,542       3,070       (322,083 )     1,489,537  
                                         

 

           Nine Months Ended December 31, 2022  
           

Fruit and

           

LIFO

         
   

Vegetable

   

Snack

   

Other

   

Impact

   

Total

 

Net sales

  $ 1,069,586     $ 85,709     $ 22,994     $ -     $ 1,178,289  

Earnings (loss) before income taxes

    124,604       (1,640 )     11,651       (79,333 )     55,282  

Total assets

    1,454,204       90,855       3,611       (250,162 )     1,298,508  

 

 
 

 

15

  

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Seneca Foods Corporation is a leading provider of packaged fruits and vegetables, with facilities located throughout the United States. Our product offerings include canned, frozen and jarred produce and snack chips that are sold under private label as well as national and regional brands that the Company owns or licenses, including Seneca®, Libby’s®, Green Giant®, Aunt Nellie’s®, Cherryman®, Green Valley® and READ®. Canned fruits and vegetables are sold nationwide by major grocery outlets, including supermarkets, mass merchandisers, limited assortment stores, club stores and dollar stores. We also sell products to foodservice distributors, restaurant chains, industrial markets, other food processors, export customers in approximately 60 countries and federal, state and local governments for school and other food programs. Additionally, the Company packs canned and frozen vegetables under contract packing agreements.

 

Business Trends

 

We purchase raw materials, including raw produce, steel, ingredients and packaging materials from growers, commodity processors, steel producers and packaging suppliers. Raw materials and other input costs, such as labor, fuel, utilities and transportation, are subject to fluctuations in price attributable to a number of factors. Fluctuations in commodity prices can lead to retail price volatility and can influence consumer and trade buying patterns. The cost of raw materials, fuel, labor, distribution and other costs related to our operations can increase from time to time significantly and unexpectedly.

 

We continue to experience material cost inflation for many of our raw materials and other input costs attributable to a number of factors, including but not limited to, supply chain disruptions (including raw material shortages), labor shortages, the conflict between Russia and Ukraine, and the conflict in Israel and Gaza. While we have no direct exposure to these conflicts, we have experienced increased costs for transportation, energy and raw materials due in part to their negative impact on the global economy. We attempt to manage cost inflation risks by locking in prices through short-term supply contracts, advance grower purchase agreements, and by implementing cost saving measures. We also attempt to offset rising input costs by raising sales prices to our customers. However, increases in the prices we charge our customers may lag behind rising input costs. Competitive pressures also may limit our ability to quickly raise prices in response to rising costs. To the extent we are unable to avoid or offset any present or future cost increases our operating results could be materially adversely affected.

 

Results of Operations

 

Net Sales:

 

The following table presents net sales by product category (in thousands):

 

    Three Months Ended    

Nine Months Ended

 
   

December 30,

   

December 31,

   

December 30,

   

December 31,

 
   

2023

   

2022

   

2023

   

2022

 

Canned vegetables

  $ 372,690     $ 392,942     $ 952,226     $ 976,026  

Frozen vegetables

    27,454       33,754       92,039       93,560  

Fruit products

    32,022       33,371       71,561       75,674  

Snack products

    3,463       3,360       10,817       10,035  

Other

    8,852       9,827       23,977       22,994  
    $ 444,481     $ 473,254     $ 1,150,620     $ 1,178,289  

 

Three Months Ended December 30, 2023 and December 31, 2022

 

Net sales totaled $444.5 million for the three months ended December 30, 2023 as compared with $473.3 million for the three months ended December 31, 2022. The overall net sales decrease of $28.8 million, or 6.1%, was predominantly due to lower sales volumes having an unfavorable impact of $50.9 million to net sales, partially offset by $22.1 million of favorability due to higher selling prices and a favorable mix impact, as compared to the prior year three-month interim period.

 

Net sales for canned vegetables, frozen vegetables, and fruit products decreased $20.3 million, $6.3 million and $1.3 million, respectively, over the prior year quarter driven by lower volume. Higher pricing in each of these categories, which was necessitated by the material cost increases that the Company is experiencing, partially offset the unfavorable impact to net sales that was generated by the lower volume. Net sales in the snack products category remained relatively consistent quarter over quarter with a $0.1 million increase. The remaining net sales decrease of $1.0 million was contributed by non-food packaging sales related to the sale of cans and ends, and outside revenue from trucking and aircraft operations.

 

16

 

Nine Months Ended December 30, 2023 and December 31, 2022

 

Net sales totaled $1,150.6 million for the nine months ended December 30, 2023 as compared with $1,178.3 million for the nine months ended December 31, 2022. The overall net sales decrease of $27.7 million, or 2.4%, was predominantly due to lower sales volumes having an unfavorable impact of $105.6 million to net sales, partially offset by higher selling prices and favorable mix, contributing favorability of $77.9 million, as compared to the prior year nine-month interim period.

 

Net sales for canned vegetables, frozen vegetables, and fruit products decreased $23.8 million, $1.5 million and $4.1 million, respectively, over the prior year nine-month interim period as increased pricing did not offset lower sales volume for these categories. Net sales in the snack products category remained relatively consistent year-over-year with a $0.8 million increase. The remaining net sales increase of $1.0 million as compared to the prior year nine-month period was contributed by non-food packaging sales related to the sale of cans and ends, and outside revenue from trucking and aircraft operations.

 

Operating and Non-Operating Income:

The following table presents components of operating and non-operating income as a percentage of net sales (percentages shown as absolute values):

 

   

Three Months Ended

    Nine Months Ended  
   

December 30,

   

December 31,

   

December 30,

   

December 31,

 
   

2023

   

2022

   

2023

   

2022

 

Gross margin

    12.2 %     11.4 %     14.6 %     10.0 %

Selling, general, and administrative expense

    5.2 %     4.6 %     5.5 %     5.1 %

Other operating income, net

    0.1 %     0.0 %     0.1 %     0.2 %

Operating income

    6.9 %     6.3 %     9.1 %     4.9 %

Other non-operating income

    0.4 %     0.4 %     0.4 %     0.4 %

Interest expense, net

    2.1 %     0.9 %     2.0 %     0.7 %

Income taxes

    1.2 %     1.4 %     1.8 %     1.1 %

 

Three Months Ended December 30, 2023 and December 31, 2022

 

Gross margin: Gross margin for the three months ended December 30, 2023 was 12.2% as compared with 11.4% for the three months ended December 31, 2022. The increase in gross margin for the three months ended December 30, 2023 was due primarily to the Company incurring a decrease in the LIFO charge for the current quarter as compared to the prior year quarter. The Company’s LIFO charge for the three months ended December 30, 2023 was $12.0 million as compared to a LIFO charge of $30.9 million for the three months ended December 31, 2022.

 

Selling, General, and Administrative: Selling, general, and administrative costs as a percentage of net sales for the three months ended December 30, 2023, were 5.2% as compared with 4.6% for the prior year quarter. The increase in selling, general, and administrative costs as a percentage of net sales was largely driven by the decrease in net sales and the fixed nature of certain other expenses. Also, there were routine increases to other expenses within the category, such as cost of living wage adjustments.

 

Other Operating Expense (Income), net: The Company had net other operating expense of $0.4 million during the three months ended December 30, 2023, which was driven by $0.6 million of transition service fees incurred in connection with the asset acquisition. Refer to Note 14 of the Notes to Condensed Consolidated Statements contained herein for further details of that transaction. During the three months ended December 31, 2022, the Company had net other operating expense of $0.2 million, which was driven primarily by a write down of idle production equipment to estimated selling price, less commission, as the assets met the criteria to be classified as held for sale at December 31, 2022. The write down was partially offset by a gain on the sale of an aircraft.

 

Restructuring: During the three months ended December 30, 2023, the Company incurred restructuring charges primarily related to plants that were closed in previous periods. During the three months ended December 31, 2022, the Company ceased production of green beans at a plant in the Northeast. As a result, the Company incurred severance costs and a write down of production equipment that was sold during the subsequent twelve months.

 

Other Non-Operating Income: Other non-operating income totaled $1.8 million and $2.0 million for the three months ended December 30, 2023, and December 31, 2022, respectively, and is comprised of the non-service related pension amounts that are actuarially determined.

 

17

 

Interest Expense, net: Interest expense as a percentage of net sales was 2.1% for the three months ended December 30, 2023, as compared to 0.9% for the three months ended December 31, 2022. Interest expense increased from $4.3 million in the prior year quarter to $9.4 million for the current quarter as a result of higher interest rates and increased long-term debt levels. 

 

Nine Months Ended December 30, 2023 and December 31, 2022

 

Gross margin: Gross margin for the nine months ended December 30, 2023 was 14.6% as compared with 10.0% for the nine months ended December 31, 2022. The increase in gross margin for the nine months ended December 30, 2023 was due primarily to the Company incurring a decrease to the LIFO charge for the current nine-month interim period as compared the prior year nine-month interim period. The Company’s LIFO charge for the nine months ended December 30, 2023 was $19.6 million as compared to a LIFO charge of $79.3 million for the nine months ended December 31, 2022.

 

Selling, General, and Administrative: Selling, general, and administrative costs as a percentage of net sales for the nine months ended December 30, 2023, were 5.5% as compared with 5.1% for the prior year nine-month interim period. The increase in selling, general, and administrative costs as a percentage of net sales was primarily due to net sales decreasing slightly year over year and the fixed nature of certain other expenses within the category. There were also routine increases to labor costs due to annual cost of living wage adjustments which impacted the current nine-month period.

 

Other Operating Income, net: The Company had net other operating income of $1.2 million during the nine months ended December 30, 2023, which was driven primarily by $1.8 million from the sale of non-operational assets in the Pacific Northwest, offset by $0.6 million of transition service fees during the nine-month period. During the nine months ended December 31, 2022, the Company had net other operating income of $2.4 million, which was driven primarily by a gain on the sale of the Company’s western trucking fleet amongst other fixed assets and a true-up of the supplemental early retirement plan accrual, partially offset by the aforementioned write down of idle production equipment.

 

Restructuring: During the nine months ended December 30, 2023, the Company incurred restructuring charges primarily due to equipment moves from plants that were closed in the previous fiscal year. During the nine months ended December 31, 2022, the Company incurred restructuring charges primarily associated with ceasing production of green beans at a plant in the Northeast. The charges were comprised of severance costs and a write down of production equipment that was sold during the subsequent twelve months.

 

Other Non-Operating Income: Other non-operating income totaled $4.5 million and $5.1 million for the nine months ended December 30, 2023, and December 31, 2022, respectively, and is comprised of the non-service related pension amounts that are actuarially determined.

 

Interest Expense, net: Interest expense as a percentage of net sales was 2.0% for the nine months ended December 30, 2023, as compared to 0.7% for the nine months ended December 31, 2022. Interest expense increased from $8.0 million in the prior year nine-month interim period to $23.1 million for the current nine-month interim period as a result of higher interest rates and increased long-term debt levels.

 

Income Taxes:

 

The Company’s effective tax rate was 23.8% and 23.5% for the nine months ended December 30, 2023 and December 31, 2022, respectively. The effective tax rate increased in the current nine-month interim period primarily due to state rate changes having an unfavorable impact on the effective rate which increased the rate by 0.3%.

 

18

 

Liquidity and Capital Resources

 

The financial condition of the Company is summarized in the following table and explanatory review (dollar amounts in thousands, except per share data):

 

   

December 30,

   

December 31,

   

March 31,

   

March 31,

 
   

2023

   

2022

   

2023

   

2022

 

Working capital:

                               

Balance

  $ 854,246     $ 642,162     $ 637,851     $ 377,531  

Change in quarter

  $ 129,552     $ 87,494                  

Current portion of long-term debt and lease obligations

  $ 30,582     $ 21,344     $ 25,792     $ 26,020  

Long-term debt, less current portion

  $ 611,349     $ 399,948     $ 432,695     $ 109,624  

Operating lease obligations, less current portion

  $ 13,617     $ 17,219     $ 16,675     $ 22,533  

Financing lease obligations, less current portion

  $ 13,102     $ 17,382     $ 17,293     $ 19,942  

Total stockholders' equity per equivalent common share (1)

  $ 82.50     $ 75.85     $ 71.95     $ 68.66  

Stockholders' equity per common share

  $ 83.33     $ 76.52     $ 72.61     $ 69.41  

Current ratio

    4.81       3.62       5.08       3.18  

 

Note (1): Equivalent common shares are either common shares or, for convertible preferred shares, the number of common shares that the preferred shares are convertible into. See Note 12 of the Notes to Consolidated Financial Statements of the Company’s 2023 Annual Report on Form 10-K/A (Amendment No. 1) for conversion details.

 

Material Cash Requirements: The Company’s primary liquidity requirements include debt service, capital expenditures, and working capital needs. The Company may also seek strategic acquisitions to leverage existing capabilities and further build upon its existing business. Liquidity requirements are funded primarily through cash generated from operations and external sources of financing, including the revolving credit facility. The Company believes that its operations along with existing liquidity sources will satisfy its cash requirements for at least the next twelve months. The Company has borrowed funds and continues to believe that it has the ability to do so at reasonable interest rates, however additional borrowings would result in increased interest expense. The Company does not have any off-balance sheet financing arrangements.

 

Summary of Cash Flows: The following table presents a summary of the Company’s cash flows from operating, investing, and financing activities (in thousands):

 

    Nine Months Ended  
   

December 30,
2023

   

December 31,

2022

 

Cash used in operating activities

  $ (128,126 )   $ (189,480 )

Cash used in investing activities

    (23,856 )     (51,496 )

Cash provided by financing activities

    154,145       242,588  

Increase in cash, cash equivalents and restricted cash

    2,163       1,612  

Cash, cash equivalents and restricted cash, beginning of period

    12,256       10,904  

Cash, cash equivalents and restricted cash, end of period

  $ 14,419     $ 12,516  

 

Net Cash Used in Operating Activities: For the nine months ended December 30, 2023, cash used in operating activities was $128.1 million, which consisted of a use of cash of $249.4 million by operating assets and liabilities partially offset by net earnings of $65.6 million, adjusted by non-cash charges of $55.7 million. The non-cash charges were largely driven by $38.1 million of depreciation and amortization and $19.6 million LIFO charge. The change in operating assets and liabilities was due to inventories being a principal use of cash as the nine-month period covered the primary seasonal pack harvest month. The increase in inventories was also impacted by finished goods acquired in the asset acquisition, refer to Note 14 of the Notes to Condensed Consolidated Statements contained herein for further details of that transaction.

 

For the nine months ended December 31, 2022, cash used in operating activities was $189.5 million, which consisted of a use of cash of $351.3 million by operating assets and liabilities partially offset by net earnings of $42.3 million, adjusted by non-cash charges of $119.5 million. The non-cash charges were largely driven by $39.7 million of depreciation and amortization and $79.3 million LIFO charge. The change in operating assets and liabilities was largely due to inventories being a use of cash driven by the material cost inflation to various production inputs. The increase in inventories was partially offset by an associated increase in accounts payable.

 

19

 

The cash requirements of the business fluctuate significantly throughout the year to coincide with the seasonal growing cycles of vegetables. The majority of the inventories are produced during the packing months, from June through November, and are then sold over the following year. Cash flow from operating activities is one of the Company’s main sources of liquidity.

 

Net Cash Used in Investing Activities: Net cash used in investing activities was $23.8 million for the nine months ended December 30, 2023, and consisted of cash used for capital expenditures of $31.8 million partially offset by proceeds from the sale of assets totaling $8.0 million.

 

Net cash used in investing activities was $51.5 million for the nine months ended December 31, 2022, and consisted of cash used for capital expenditures of $56.5 million partially offset by proceeds from the sale of assets totaling $5.0 million.

 

Net Cash Provided by Financing Activities: Net cash provided by financing activities was $154.1 million for the nine months ended December 30, 2023, driven primarily by a net increase in the Company’s debt borrowings of $187.6 million during the nine-month interim period. Additionally, the Company used cash of $27.1 million to purchase treasury stock and $6.4 million to make payments on financing leases, which partially offset the increased cash provided.

 

Net cash provided by financing activities was $242.6 million for the nine months ended December 31, 2022, driven by a net increase in debt borrowings of $290.3 million. These cash proceeds were partially offset by purchasing treasury stock of $41.2 million and by making payments of $6.5 million on financing leases.

 

 

Impact of Seasonality on Financial Position and Results of Operations:

 

While individual vegetables have seasonal cycles of peak production and sales, the different cycles are somewhat offsetting. Minimal food packaging occurs in the Company's last fiscal quarter ending March 31, which is the optimal time for maintenance, repairs and equipment changes in its packaging plants. The supply of commodities, current pricing, and expected new crop quantity and quality affect the timing and amount of the Company’s sales and earnings. When the seasonal harvesting periods of the Company's major vegetables are newly completed, inventories for these packaged vegetables are at their highest levels. For peas, the peak inventory time is mid-summer and for corn and green beans, the Company's highest volume vegetables, the peak inventory is in mid-autumn. The seasonal nature of the Company’s production cycle results in inventory and accounts payable reaching their lowest point late in the fourth quarter/early in the first quarter prior to the new seasonal pack commencing. As the seasonal pack progresses, these components of working capital both increase until the pack is complete.

 

The Company’s fruit and vegetable sales exhibit seasonal increases in the third fiscal quarter due to increased retail demand during the holiday seasons. In addition, the Company sells canned and frozen vegetables to a co-pack customer on a bill and hold basis at the end of each pack cycle, which typically occurs during the second and third quarters. The seasonal nature of the Company’s sales, particularly holiday driven retail sales, result in the accounts receivable balance reaching its highest point at the end of the second and third fiscal quarters, while typically being the lowest at the end of the first quarter.

 

 

Non-GAAP Financial Measures:

 

Adjusted net earnings, EBITDA, and FIFO EBITDA are non-GAAP financial measures and are provided for information purposes only. The Company believes these non-GAAP financial measures provide investors with helpful information to evaluate financial performance, perform comparisons from period to period, and to compare results against the Company’s industry peers. A non-GAAP financial measure is defined as a numerical measure of our financial performance that excludes or includes amounts so as to be different from the most directly comparable measure calculated and presented in accordance with GAAP in our condensed consolidated balance sheets and related condensed consolidated statements of net earnings, comprehensive income, stockholders’ equity and cash flows. The Company does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP.

 

20

 

Adjusted net earnings is calculated on a FIFO basis which excludes the impact from the application of LIFO. Set forth below is a reconciliation of reported earnings before income taxes to adjusted net earnings (in thousands):

 

   

Three Months Ended

    Nine Months Ended  
   

December 30,

2023

   

December 31,

2022

   

December 30,

2023

   

December 31,

2022

 
                                 

Earnings before income taxes, as reported

  $ 23,199     $ 27,557     $ 86,037     $ 55,282  

LIFO charge

    12,027       30,898       19,643       79,333  

Adjusted earnings before income taxes

    35,226       58,455       105,680       134,615  

Income taxes (1)

    8,519       14,197       25,363       32,748  

Adjusted net earnings

  $ 26,707     $ 44,258     $ 80,317     $ 101,867  

 

 

(1)

For the three months ended December 30, 2023 and December 31, 2022, income taxes on adjusted earnings before taxes were calculated using the income tax provision amounts of $5.5 million and $6.5 million, respectively, and applying the statutory rate of 24.9% for each of the respective periods to the pre-tax LIFO charge.

 

For the nine months ended December 30, 2023 and December 31, 2022, income taxes on adjusted earnings before taxes were calculated using the income tax provision amounts of $20.5 million and $13.0 million, respectively, and applying the statutory rate of 24.9% for each of the respective periods to the pre-tax LIFO charge.

 

The Company believes EBITDA is often a useful measure of a Company’s operating performance because EBITDA excludes charges for depreciation, amortization, and interest expense as well as the Company’s provision for income tax expense. EBITDA is frequently used as one of the bases for comparing businesses in the Company’s industry. FIFO EBITDA also excludes non-cash charges related to the LIFO inventory valuation method. The Company’s revolving credit facility and term loan agreements use FIFO EBITDA in the financial covenants thereunder. Set forth below is a reconciliation of reported net earnings to EBITDA and FIFO EBITDA (in thousands):

 

    Three Months Ended    

Nine Months Ended

 

EBITDA and FIFO EBITDA:

 

December 30,

2023

   

December 31,

2022

   

December 30,

2023

   

December 31,

2022

 
                                 

Net earnings

  $ 17,675     $ 21,054     $ 65,565     $ 42,288  

Income tax expense

    5,524       6,503       20,472       12,994  

Interest expense, net of interest income

    9,388       4,277       23,146       8,037  

Depreciation and amortization

    12,645       12,980       38,070       39,721  

Interest amortization (1)

    (113 )     (60 )     (327 )     (181 )

EBITDA

    45,119       44,754       146,926       102,859  

LIFO charge

    12,027       30,898       19,643       79,333  

FIFO EBITDA

  $ 57,146     $ 75,652     $ 166,569     $ 182,192  

 

  (1)

Reconciling item needed to exclude debt issuance cost amortization from the amount shown for interest expense. 

 

New Accounting Standards

 

Refer to Note 1, “Basis of Preparation and Presentation”, to the Condensed Consolidated Financial Statements contained herein.

 

Critical Accounting Policies and Estimates

 

A description of the Company's critical accounting policies and estimates is contained in the Company’s Annual Report on Form 10-K/A (Amendment No. 1) for the fiscal year ended March 31, 2023. There were no material changes to the Company's critical accounting policies or estimates during the three and nine months ended December 30, 2023.

 

21

 

Forward-Looking Information

 

This Quarterly Report on Form 10-Q contains “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they address future events, developments, and results and do not relate strictly to historical facts. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain the words "will," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "seeks," "should," "likely," "targets," "may", "can" and variations thereof and similar expressions. Forward-looking statements are subject to known and unknown risks, uncertainties, and other important factors that could cause actual results to differ materially from those expressed. We believe important factors that could cause actual results to differ materially from our expectations include, but are not limited to, the following:

 

 

the effects of rising costs and availability of raw fruit and vegetables, steel, ingredients, packaging, other raw materials, distribution and labor;

 

crude oil prices and their impact on distribution, packaging and energy costs;

 

an overall labor shortage, ability to retain a sufficient seasonal workforce, lack of skilled labor, labor inflation or increased turnover impacting our ability to recruit and retain employees;

 

climate and weather affecting growing conditions and crop yields;

 

our ability to successfully implement sales price increases and cost saving measures to offset cost increases;

 

the loss of significant customers or a substantial reduction in orders from these customers;

 

effectiveness of our marketing and trade promotion programs;

 

competition, changes in consumer preferences, demand for our products and local economic and market conditions;

 

the impact of a pandemic on our business, suppliers, customers, consumers and employees;

 

unanticipated expenses, including, without limitation, litigation or legal settlement expenses;

 

product liability claims;

 

the anticipated needs for, and the availability of, cash;

 

the availability of financing;

 

leverage and the ability to service and reduce debt;

 

foreign currency exchange and interest rate fluctuations;

 

the risks associated with the expansion of our business;

 

the ability to successfully integrate acquisitions into our operations;

 

our ability to protect information systems against, or effectively respond to, a cybersecurity incident or other disruption;

 

other factors that affect the food industry generally, including:

 

o

recalls if products become adulterated or misbranded, liability if product consumption causes injury, ingredient disclosure and labeling laws and regulations and the possibility that consumers could lose confidence in the safety and quality of certain food products;

 

o

competitors’ pricing practices and promotional spending levels;

 

o

fluctuations in the level of our customers’ inventories and credit and other business risks related to our customers operating in a challenging economic and competitive environment; and

 

o

the risks associated with third-party suppliers, including the risk that any failure by one or more of our third-party suppliers to comply with food safety or other laws and regulations may disrupt our supply of raw materials or certain finished goods products or injure our reputation; and

 

changes in, or the failure or inability to comply with, U.S., foreign and local governmental regulations, including health, environmental, and safety regulations.

 

Any of these factors, as well as such other factors as discussed in our other periodic filings with the SEC, could cause our actual results to differ materially from our anticipated results. The information provided in this Form 10-Q is based upon the facts and circumstances known as of the date of this report, and any forward-looking statements made by us in this Form 10-Q speak only as of the date on which they are made. Except as required by law, we undertake no obligation to update these forward-looking statements after the date of this Form 10-Q to reflect events or circumstances after such date, or to reflect the occurrence of unanticipated events.

 

22

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

In the ordinary course of business, the Company is exposed to various market risk factors, including changes in general economic conditions, competition and raw material pricing and availability. There have been no material changes to the Company’s exposure to market risk since March 31, 2023. In addition, the Company is exposed to fluctuations in interest rates, primarily related to its revolving credit facility and Amended Term Loan A-2. To manage interest rate risk, the Company uses both fixed and variable interest rate debt plus fixed interest rate lease obligations.

 

Item 4. Controls and Procedures

 

The Company maintains a system of internal and disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported on a timely basis. The Company’s Board of Directors, operating through its Audit Committee, which is composed entirely of independent outside directors, provides oversight to the financial reporting process.

 

As reported in the Company’s amended Annual Report on Form 10-K/A for the year ended March 31 2023, subsequent to the year-end audit, the Company’s management identified a material weakness in the Company’s internal control over financial reporting relating to the accounting for valuing inventory using the LIFO method, specifically the review controls in place with respect to a year-end adjustment to the calculation of the LIFO reserve were not effective.  An actual valuation of inventory under the LIFO method is made at the end of each fiscal year based on the inventory levels and costs at that time. During the formulaic valuation of actual inventory values at fiscal year-end, incorrect quantities were applied to the calculation which resulted in an understatement of the LIFO reserve as of March 31, 2023 and 2022. In contrast, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels, production pack yields, sales and the expected rate of inflation or deflation for the year. The interim LIFO calculations are subject to adjustment in the final year-end LIFO inventory valuation.

 

A material weakness relating to the year-end adjustment to the calculation of the LIFO reserve cannot be considered remediated until the applicable remedial controls operate for a sufficient time. Notwithstanding the existence of the above-mentioned material weakness, the Company believes that the consolidated financial statements in this filing fairly present, in all material respects, the Company’s financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with U.S. generally accepted accounting principles. Additionally, our management has concluded that the Company’s interim LIFO calculations are not impacted by this material weakness.

 

An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of December 30, 2023, our disclosure controls and procedures were effective. The Company continues to examine, refine and formalize its disclosure controls and procedures and to monitor ongoing developments in this area.

 

In response to the previously disclosed material weakness, the Company has identified certain remedial actions to mitigate the material weakness, including the implementation of new controls and the enhancement of existing controls to reconcile the inventory quantities used in the year-end LIFO calculation to the quantities in the Company’s enterprise resource planning system. The Company will also utilize newly developed software, equipped with analytical features allowing for comparison and trend analysis to previous periods, to perform the LIFO calculation. The Company’s management will review and investigate material irregularities identified by this software and document the cause of those irregularities prior to approval of the final LIFO calculation.

 

Other than the remedial actions noted above, there have been no changes during the period covered by this report to the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

23

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

Refer to Note 13, “Legal Proceedings and Other Contingencies,” to the Condensed Consolidated Financial Statements contained herein.

 

 

Item 1A. Risk Factors

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 except to the extent factual information disclosed elsewhere in this Form 10-Q relates to such risk factors.

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

 

 Total Number of

 Average Price 

 

Maximum Number

 

 Shares Purchased

 Paid per Share

Total Number of Shares

(or Approximate Dollar Value)

         

Purchased as Part of

of Shares that May Yet

 

Class A 

Class B 

Class A 

Class B 

Publicly Announced

Be Purchased Under the

Period

Common

Common

Common

Common

Plans or Programs

Plans or Programs

10/1/2023 -

           

10/31/2023 (1)

109,515

-

$           54.54

-

99,115

 

11/1/2023 -

           

11/30/2023

17,192

-

$           54.23

-

17,192

 

12/1/2023 -

           

12/31/2023 (2)

11,210

-

$           51.78

-

0

 

Total

137,917

$           54.27

116,307

605,273

 

 

(1)

Includes 10,400 shares that were purchased in open market transactions by the trustees under the Seneca Foods Corporation Employees' Savings Plan to provide employee matching contributions under the plan.

   

 

 

(2)

Includes 11,210 shares that were purchased in open market transactions by the trustees under the Seneca Foods Corporation Employees' Savings Plan to provide employee matching contributions under the plan.

 

 

Item 3. Defaults Upon Senior Securities

None.

 

 

Item 4.

None.

 

24

 

 

Item 5. Other Information

(c) Trading Plans

Mine Safety Disclosures During the quarterly period ended December 30, 2023, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (in each case, as defined in Item 408(a) of Regulation S-K).

 

 

Item 6. Exhibits

 

Exhibit

Number

Description

   

31.1

Certification of Paul L. Palmby pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

   

31.2

Certification of Michael S. Wolcott pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

   

32

Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

   
   

101.INS

Inline XBRL Instance Document

101.1.SCH

Inline XBRL Taxonomy Extension Calculation Schema Document

101.2.CAL 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.3.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.4.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.5.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

 

25

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

   

SENECA FOODS CORPORATION

 
       
       
 

By:

/s/ Paul L. Palmby

 
   

Paul L. Palmby

 
   

President and Chief Executive

Officer

 
   

(Principal Executive Officer)

 
       
   

February 8, 2024

 
       
       
 

By:

/s/ Michael S. Wolcott

 
   

Michael S. Wolcott

 
   

Chief Financial Officer

 
   

(Principal Financial Officer)

 
       
       
   

February 8, 2024

 

 

26
EX-31.1 2 ex_620687.htm EXHIBIT 31.1 ex_620687.htm

 

EXHIBIT 31.1

 

CERTIFICATION

 

I, Paul L. Palmby, certify that:

 

 

1.

I have reviewed this quarterly report on Form 10-Q of Seneca Foods Corporation;

 

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

 

 

4.

The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

 

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

(c)

Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

(d)

Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

 

 

5.

The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

 

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

 

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

 

 

 

/s/ Paul L. Palmby                  

 

Paul L. Palmby

 

President and Chief Executive Officer

 

(Principal Executive Officer)

   
 

February 8, 2024

 

 

 
EX-31.2 3 ex_620688.htm EXHIBIT 31.2 ex_620688.htm

 

EXHIBIT 31.2

 

CERTIFICATION

 

I, Michael S. Wolcott, certify that:

 

 

1.

I have reviewed this quarterly report on Form 10-Q of Seneca Foods Corporation;

 

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

 

 

4.

The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

 

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

(c)

Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

(d)

Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

 

 

5.

The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

 

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

 

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

 

 

 

/s/ Michael S. Wolcott                  

 

Michael S. Wolcott

 

Chief Financial Officer

 

(Principal Financial Officer)

   
 

February 8, 2024

 

 

 
EX-32 4 ex_620689.htm EXHIBIT 32 ex_620689.htm

 

EXHIBIT 32

 

CERTIFICATION PURSUANT TO

18. U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

In connection with the Quarterly Report of Seneca Foods Corporation (the "Registrant") on Form 10-Q for the period ended December 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Paul L. Palmby, President and Chief Executive Officer, and Michael S. Wolcott, Chief Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that, to our knowledge:

 

(1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)  The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

 

 

/s/ Paul L. Palmby                  

 

Paul L. Palmby

 

President and Chief Executive Officer

 

(Principal Executive Officer)

   
 

February 8, 2024

   
   
 

/s/ Michael S. Wolcott          

 

Michael S. Wolcott

 

Chief Financial Officer

 

(Principal Financial Officer)

   
 

February 8, 2024