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Seneca Foods Corp. Reports Operating Results (10-Q)

November 05, 2009 | About:
10qk

10qk

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Seneca Foods Corp. (SENEA) filed Quarterly Report for the period ended 2009-09-26.

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 $221.2 million; its shares were traded at around $26.2 with and P/S ratio of 0.2.

Highlight of Business Operations:

Second fiscal quarter 2010 results include Net Sales of $323.2 million, which represents a 2.5% increase, or $7.8 million, from the second quarter of fiscal 2009. The increase in sales is attributable to increased selling prices/improved sales mix of $15.8 million partially offset by a sales volume reduction of $8.0 million. The increase in sales is primarily from a $9.8 million increase in Canned Vegetable sales and a $3.3 million increase in Snack sales.

Net Sales for the six months ended September 26, 2009 were $553.7 million, which represents a 4.1%, or $21.6 million, increase from the six months ended September 27, 2008. The increase in sales is attributable to increased selling prices/improved sales mix of $45.8 million partially offset by reduced sales volume of $24.2 million. The increase in sales is primarily from a $20.5 million increase in Canned Vegetable sales and a $6.9 million increase in Snack sales.

Basic and diluted earnings per share were $1.02 and $.36 for the three months ended September 26, 2009 and September 27, 2008, respectively. Basic earnings per share were $1.94 and $.19 for the six months ended September 26, 2009 and September 27, 2008, respectively. Diluted earnings per share were $1.92 and $.19 for the six months ended September 26, 2009 and September 27, 2008, respectively. For details of the calculation of these amounts, refer to footnote 11 of the Notes to Condensed Consolidated Financial Statements.

As shown in the Condensed Consolidated Statements of Cash Flows, Net Cash Used in Operating Activities was $33.9 million in the first six months of fiscal 2010, compared to Net Cash Used in Operating Activities of $8.3 million in the first six months of fiscal 2009. The $25.6 million increased cash usage is primarily attributable to increased inventory of $335.2 million (exclusive of off-season reserve) in the first six months of fiscal 2010 as compared to $252.8 million increase in inventory in the first six months of fiscal 2009, partially offset by increased net earnings of $21.2 million as previously discussed, a $34.9 million increase in cash provided by Accounts Payable, Accrued Expenses and Other Liabilities as compared to the first six months of September 27, 2008 and a $12.5 million increase in cash provided by accounts receivable as compared to the first six months of September 27, 2008. This increase is due to higher steel costs and the timing of certain raw material purchases.

As compared to September 27, 2008, inventory increased $79.6 million. The components of the inventory increase reflect a $59.6 million increase in Finished Goods (net of the Off-Season Reserve), a $1.8 million increase in Work in Process and $18.2 million increase in Raw Materials and Supplies. The Finished Goods increase reflects higher inventory quantities attributable to increased production during the harvest season and decreased sales volume as compared to prior year. FIFO based inventory costs exceeded LIFO based inventory costs by $95.9 million as of the end of the second quarter of 2010 as compared to $52.7 million as of the end of the second quarter of 2009. The Raw Materials increase is primarily due to an increase in cans and raw steel quantities over the prior year. The Off-Season Reserve increased by $36.6 million, as compared to September 2008, due to the timing of the seasonal pack and certain expenses. Refer to the Critical Accounting Policies section of this Form 10-Q for further details on the Off-Season Reserve.

Cash Provided by Financing Activities was $48.3 million in the first six months of fiscal 2010, which included borrowings of $234.6 million and the repayment of $186.6 million of Long-Term Debt principally consisting of borrowing and repayment on the revolving credit facility (“Revolver”). The $29.0 million year-over-year increase in net cash provided by financing activities is primarily related to the $79.6 million increase in Inventory discussed above. There was no new Long-Term Debt.

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