Seneca Foods Corp. (SENEA, Financial) filed Quarterly Report for the period ended 2010-07-03.
Seneca Foods Corp. has a market cap of $288.5 million; its shares were traded at around $30.2 with a P/E ratio of 7.4 and P/S ratio of 0.2. SENEA is in the portfolios of Ron Baron of Baron Funds, Chuck Royce of Royce& Associates, Charles Brandes of Brandes Investment, George Soros of Soros Fund Management LLC.
For the three month period ended July 3, 2010, the gross margin decreased from the prior year quarter from 15.6% to 11.5% due primarily to lower net selling prices (after considering promotions) compared to the prior year which was partially offset by a LIFO credit in the current year as compared to a charge in prior year. The LIFO credit for the first quarter ended July 3, 2010 was $4,132,000 as compared to a charge of $4,701,000 for the first quarter ended June 27, 2009 and reflects the impact on the quarter of reduced inflationary cost increases expected in fiscal 2011, compared to fiscal 2010. On an after-tax basis, LIFO increased net earnings by $2,686,000 for the quarter ended July 3, 2010 and reduced net earnings by $3,055,000 for the quarter ended June 27, 2009, based on the statutory federal income tax rate.
As shown in the Condensed Consolidated Statements of Cash Flows, net cash provided by operating activities was $26.2 million in the first three months of fiscal 2011, compared to net cash provided by operating activities of $31.4 million in the first three months of fiscal 2010. The $5.2 million decrease in cash provided is primarily attributable to decreased inventory of $21.1 million in the first three months of fiscal 2011 as compared to $22.8 million decrease in inventory in the first three months of fiscal 2010, an $8.3 million increase in cash used for income taxes as compared to the first three months of June 27, 2009, a $5.7 million decrease in cash provided by accounts payable, accrued expenses and other liabilities as compared to the first three months of June 27, 2009, and decreased net earnings of $5.8 million as previously discussed, partially offset by a $9.7 million increase in cash provided by accounts receivable as compared to the first three months of June 27, 2009.
As compared to June 27, 2009, inventory increased $51.8 million. The components of the inventory increase reflect an $80.9 million increase in finished goods (net of off-season), a $2.6 million increase in work in process and $31.7 million decrease in raw materials and supplies. The finished goods increase reflects higher inventory quantities attributable to increased production during the last harvest season and decreased sales volume as compared to the prior year. The raw materials and supplies decrease is primarily due to a decrease in cans and raw steel quantities compared to the prior year. FIFO based inventory costs exceeded LIFO based inventory costs by $93.6 million as of the end of the first quarter of 2011 as compared to $91.2 million as of the end of the first quarter of 2010. The off-season increased by $2.3 million, as compared to June 27, 2009, due to the timing of certain expenses. Refer to the Critical Accounting Policies section of this Form 10-Q for further details on the off-season.
Cash used in investing activities was $6.6 million in the first three months of fiscal 2011 compared to $6.7 million in the first three months of fiscal 2010. Additions to property, plant and equipment were $6.6 million in the first three months of fiscal 2011 as compared to $6.7 million in first three months of fiscal 2010.
In connection with the August 18, 2006 acquisition of Signature Fruit Company, LLC, the Company expanded its Revolver from $100 million to $250 million with a five-year term to finance its seasonal working capital requirements. The interest rate on the Revolver is based on LIBOR or Bank of America s prime rate plus an applicable margin based on overall Company leverage. As of July 3, 2010, the interest rate was approximately 1.60% on a balance of $92.1 million. At August 2, 2010, the interest rate on the Revolver was 1.58% on a balance of $124.7 million. We believe that cash flows from operations, availability under our Revolver and other financing sources will provide adequate funds for our working capital needs, planned capital expenditures, and debt obligations for at least the next 12 months.
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Seneca Foods Corp. has a market cap of $288.5 million; its shares were traded at around $30.2 with a P/E ratio of 7.4 and P/S ratio of 0.2. SENEA is in the portfolios of Ron Baron of Baron Funds, Chuck Royce of Royce& Associates, Charles Brandes of Brandes Investment, George Soros of Soros Fund Management LLC.
Highlight of Business Operations:
First fiscal quarter 2011 results include net sales of $219.9 million, which represents a 4.6% decrease, or $10.6 million, from the first quarter of fiscal 2010. The decrease in sales is attributable to lower selling prices/sales mix of $35.4 million partially offset by a sales volume increase of $24.8 million. The decrease in sales is primarily from a $6.4 million decrease in Canned Vegetable sales, a $4.8 million decrease in Canned Fruit sales and a $4.7 million decrease in Snack sales partially offset by a $4.8 million increase in Green Giant Alliance sales.For the three month period ended July 3, 2010, the gross margin decreased from the prior year quarter from 15.6% to 11.5% due primarily to lower net selling prices (after considering promotions) compared to the prior year which was partially offset by a LIFO credit in the current year as compared to a charge in prior year. The LIFO credit for the first quarter ended July 3, 2010 was $4,132,000 as compared to a charge of $4,701,000 for the first quarter ended June 27, 2009 and reflects the impact on the quarter of reduced inflationary cost increases expected in fiscal 2011, compared to fiscal 2010. On an after-tax basis, LIFO increased net earnings by $2,686,000 for the quarter ended July 3, 2010 and reduced net earnings by $3,055,000 for the quarter ended June 27, 2009, based on the statutory federal income tax rate.
As shown in the Condensed Consolidated Statements of Cash Flows, net cash provided by operating activities was $26.2 million in the first three months of fiscal 2011, compared to net cash provided by operating activities of $31.4 million in the first three months of fiscal 2010. The $5.2 million decrease in cash provided is primarily attributable to decreased inventory of $21.1 million in the first three months of fiscal 2011 as compared to $22.8 million decrease in inventory in the first three months of fiscal 2010, an $8.3 million increase in cash used for income taxes as compared to the first three months of June 27, 2009, a $5.7 million decrease in cash provided by accounts payable, accrued expenses and other liabilities as compared to the first three months of June 27, 2009, and decreased net earnings of $5.8 million as previously discussed, partially offset by a $9.7 million increase in cash provided by accounts receivable as compared to the first three months of June 27, 2009.
As compared to June 27, 2009, inventory increased $51.8 million. The components of the inventory increase reflect an $80.9 million increase in finished goods (net of off-season), a $2.6 million increase in work in process and $31.7 million decrease in raw materials and supplies. The finished goods increase reflects higher inventory quantities attributable to increased production during the last harvest season and decreased sales volume as compared to the prior year. The raw materials and supplies decrease is primarily due to a decrease in cans and raw steel quantities compared to the prior year. FIFO based inventory costs exceeded LIFO based inventory costs by $93.6 million as of the end of the first quarter of 2011 as compared to $91.2 million as of the end of the first quarter of 2010. The off-season increased by $2.3 million, as compared to June 27, 2009, due to the timing of certain expenses. Refer to the Critical Accounting Policies section of this Form 10-Q for further details on the off-season.
Cash used in investing activities was $6.6 million in the first three months of fiscal 2011 compared to $6.7 million in the first three months of fiscal 2010. Additions to property, plant and equipment were $6.6 million in the first three months of fiscal 2011 as compared to $6.7 million in first three months of fiscal 2010.
In connection with the August 18, 2006 acquisition of Signature Fruit Company, LLC, the Company expanded its Revolver from $100 million to $250 million with a five-year term to finance its seasonal working capital requirements. The interest rate on the Revolver is based on LIBOR or Bank of America s prime rate plus an applicable margin based on overall Company leverage. As of July 3, 2010, the interest rate was approximately 1.60% on a balance of $92.1 million. At August 2, 2010, the interest rate on the Revolver was 1.58% on a balance of $124.7 million. We believe that cash flows from operations, availability under our Revolver and other financing sources will provide adequate funds for our working capital needs, planned capital expenditures, and debt obligations for at least the next 12 months.
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