Seneca Foods Corp. (SENEA, Financial) filed Quarterly Report for the period ended 2009-06-27.
Seneca Foods Corporation is an independent publicly traded food processing company. They are a fully integrated producer having made significant investments in facilities and technologies to enhance manufacturing processes increase line speeds and guarantee premium quality. At Seneca they even develop crop seeds and manufacture their own cans to give an additional competitive advantage. Seneca Foods Corp. has a market cap of $196.8 million; its shares were traded at around $25.95 with and P/S ratio of 0.1.
For the three month period ended June 27, 2009, the gross margin increased from the prior year quarter from 7.3% to 15.6% due primarily to higher selling prices compared to the prior year which was partially offset by higher produce and steel costs of the current year pack as compared to the prior year. FIFO based inventory costs exceeded LIFO based inventory costs by $91,199,000 as of the end of the first quarter of 2010. The increase in the LIFO Reserve for the first quarter ended June 27, 2009 was $4,701,000 as compared to $10,276,000 for the first quarter ended June 28, 2008 and reflects the impact on the quarter of reduced inflationary cost increases expected in fiscal 2010, compared to fiscal 2009. On an after-tax basis, LIFO reduced Net Earnings by $3,056,000 for the quarter ended June 27, 2009 and by $6,679,000 for the quarter ended June 28, 2008, 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 $31.4 million in the first three months of fiscal 2010, compared to net Cash Provided by Operating Activities of $49.5 million in the first three months of fiscal 2009. The $18.1 million reduction in cash generation is primarily attributable to decreased inventory of $44.0 million (exclusive of off-season reserve) in the first three months of fiscal 2010 as compared to $92.0 million decrease in inventory in the first three months of fiscal 2009, partically offset by increased net earnings of $13.2 million as previously discussed, a $6.9 million increase in cash provided by Accounts Payable, Accrued Expenses and Other Liabilities as compared to the first three months of June 28, 2008 and a $4.4 million increase in cash provided by accounts receivable as compared to the first three months of June 28, 2008. This increase is due to higher steel costs and the timing of certain raw material purchases.
As compared to June 28, 2008, inventory increased $42.1 million. The components of the inventory increase reflect a $9.2 million increase in Finished Goods (net of the Off-Season Reserve), an $11.9 million increase in Work in Process and $21.0 million increase in Raw Materials and Supplies. The Finished Goods increase reflects higher inventory quantities. FIFO based inventory costs exceeded LIFO based inventory costs by $91.2 million as of the end of the first quarter of 2010 as compared to $38.4 million as of the end of the first quarter of 2009. The Work in Process increase is primarily due to an increase in frozen vegetables of $9.6 million over the prior year. This is due to higher quantities in inventory in the current year as compared to the prior year. The Raw Materials increase is primarily due to an increase in cans and raw steel quantities over the prior year. The Off-Season Reserve decreased by $3.1 million, as compared to June 2008, 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 Reserve.
Cash Used in Investing Activities was $6.7 million in the first three months of fiscal 2010 compared to $5.9 million in the first three months of fiscal 2009. Additions to Property, Plant and Equipment were $6.7 million in the first three months of fiscal 2010 as compared to $6.3 million in fiscal 2009.
Cash Used in Financing Activities was $22.0 million in the first three months of fiscal 2010, which included borrowings of $48.3 million and the repayment of $70.4 million of Long-Term Debt principally consisting of borrowing and repayment on the revolving credit facility (“Revolver”). The $24.0 million year-over-year reduction in net cash used in financing activities is primarily related to the $42.9 million increase in Inventory discussed above. There was no new Long Term Debt.
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Seneca Foods Corporation is an independent publicly traded food processing company. They are a fully integrated producer having made significant investments in facilities and technologies to enhance manufacturing processes increase line speeds and guarantee premium quality. At Seneca they even develop crop seeds and manufacture their own cans to give an additional competitive advantage. Seneca Foods Corp. has a market cap of $196.8 million; its shares were traded at around $25.95 with and P/S ratio of 0.1.
Highlight of Business Operations:
First fiscal quarter 2010 results include Net Sales of $230.5 million, which represents a 6.4% increase, or $13.8 million, from the first quarter of fiscal 2009. The increase in sales is attributable to increased selling prices/improved sales mix of $17.6 million partially offset by a sales volume reduction which accounted for $3.8 million. The increase in sales is primarily from a $10.8 million increase in Canned Vegetable sales and a $3.7 million increase in Snack sales.For the three month period ended June 27, 2009, the gross margin increased from the prior year quarter from 7.3% to 15.6% due primarily to higher selling prices compared to the prior year which was partially offset by higher produce and steel costs of the current year pack as compared to the prior year. FIFO based inventory costs exceeded LIFO based inventory costs by $91,199,000 as of the end of the first quarter of 2010. The increase in the LIFO Reserve for the first quarter ended June 27, 2009 was $4,701,000 as compared to $10,276,000 for the first quarter ended June 28, 2008 and reflects the impact on the quarter of reduced inflationary cost increases expected in fiscal 2010, compared to fiscal 2009. On an after-tax basis, LIFO reduced Net Earnings by $3,056,000 for the quarter ended June 27, 2009 and by $6,679,000 for the quarter ended June 28, 2008, 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 $31.4 million in the first three months of fiscal 2010, compared to net Cash Provided by Operating Activities of $49.5 million in the first three months of fiscal 2009. The $18.1 million reduction in cash generation is primarily attributable to decreased inventory of $44.0 million (exclusive of off-season reserve) in the first three months of fiscal 2010 as compared to $92.0 million decrease in inventory in the first three months of fiscal 2009, partically offset by increased net earnings of $13.2 million as previously discussed, a $6.9 million increase in cash provided by Accounts Payable, Accrued Expenses and Other Liabilities as compared to the first three months of June 28, 2008 and a $4.4 million increase in cash provided by accounts receivable as compared to the first three months of June 28, 2008. This increase is due to higher steel costs and the timing of certain raw material purchases.
As compared to June 28, 2008, inventory increased $42.1 million. The components of the inventory increase reflect a $9.2 million increase in Finished Goods (net of the Off-Season Reserve), an $11.9 million increase in Work in Process and $21.0 million increase in Raw Materials and Supplies. The Finished Goods increase reflects higher inventory quantities. FIFO based inventory costs exceeded LIFO based inventory costs by $91.2 million as of the end of the first quarter of 2010 as compared to $38.4 million as of the end of the first quarter of 2009. The Work in Process increase is primarily due to an increase in frozen vegetables of $9.6 million over the prior year. This is due to higher quantities in inventory in the current year as compared to the prior year. The Raw Materials increase is primarily due to an increase in cans and raw steel quantities over the prior year. The Off-Season Reserve decreased by $3.1 million, as compared to June 2008, 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 Reserve.
Cash Used in Investing Activities was $6.7 million in the first three months of fiscal 2010 compared to $5.9 million in the first three months of fiscal 2009. Additions to Property, Plant and Equipment were $6.7 million in the first three months of fiscal 2010 as compared to $6.3 million in fiscal 2009.
Cash Used in Financing Activities was $22.0 million in the first three months of fiscal 2010, which included borrowings of $48.3 million and the repayment of $70.4 million of Long-Term Debt principally consisting of borrowing and repayment on the revolving credit facility (“Revolver”). The $24.0 million year-over-year reduction in net cash used in financing activities is primarily related to the $42.9 million increase in Inventory discussed above. There was no new Long Term Debt.
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