Seneca Foods Corporation (SENEA) Bundle
Understanding Seneca Foods Corporation (SENEA) Revenue Streams
Understanding Seneca Foods Corporation’s Revenue Streams
Seneca Foods Corporation reported net sales of $425.5 million for the three months ended September 28, 2024, compared to $407.5 million for the same period in 2023, reflecting an increase of 4.4% year-over-year. For the six months ended September 28, 2024, net sales were $730.2 million, up from $706.1 million in the previous year, indicating a growth of 3.4%.
Breakdown of Primary Revenue Sources
| Product Category | Q2 2024 Net Sales (in $000) | Q2 2023 Net Sales (in $000) | YTD 2024 Net Sales (in $000) | YTD 2023 Net Sales (in $000) |
|---|---|---|---|---|
| Canned Vegetables | $351,268 | $328,586 | $605,017 | $579,536 |
| Frozen Vegetables | $39,086 | $43,046 | $64,420 | $64,585 |
| Fruit Products | $22,315 | $22,801 | $41,156 | $39,539 |
| Snack Products | $4,038 | $4,256 | $6,903 | $7,354 |
| Other | $8,758 | $8,786 | $12,696 | $15,125 |
| Total | $425,465 | $407,475 | $730,192 | $706,139 |
Year-over-Year Revenue Growth Rate
The overall net sales increase of $18.0 million for the three months ended September 28, 2024, was attributed to higher sales volumes and a favorable product mix, contributing $8.5 million and increased selling prices contributing $9.5 million. The canned and frozen vegetable categories saw a combined increase of $18.7 million due to higher demand and pricing.
Contribution of Different Business Segments to Overall Revenue
For the six months ended September 28, 2024, the contribution from various segments was as follows:
- Canned Vegetables: $605.0 million
- Frozen Vegetables: $64.4 million
- Fruit Products: $41.2 million
- Snack Products: $6.9 million
- Other: $12.7 million
Analysis of Significant Changes in Revenue Streams
The revenue from canned vegetables increased by $25.4 million over the prior year, driven primarily by heightened demand and favorable pricing strategies. In contrast, frozen vegetable sales remained flat compared to the previous year. The fruit products segment saw a modest increase of $1.6 million attributed to pricing adjustments, while snack products experienced a slight decline of $0.5 million.
Overall, the company's revenue streams demonstrate resilience, particularly in the canned vegetables category, which remains a significant driver of growth amid fluctuating market conditions.
A Deep Dive into Seneca Foods Corporation (SENEA) Profitability
Profitability Metrics
Gross Profit Margin: For the three months ended September 28, 2024, the gross profit margin was 10.1%, down from 14.3% for the same period in 2023. For the six months ended September 28, 2024, it was 11.7%, compared to 16.1% in 2023.
Operating Profit Margin: The operating profit margin for the three months ended September 28, 2024, was 5.8%, a decrease from 9.4% in 2023. For the six months ended September 28, 2024, the operating profit margin stood at 6.9%, down from 10.5% in 2023.
Net Profit Margin: The net profit margin for the three months ended September 28, 2024, was 3.1% compared to 6.1% in 2023. The six months ended September 28, 2024, showed a net profit margin of 3.6%, down from 6.7% in the previous year.
Trends in Profitability Over Time
Net sales increased to $425.5 million for the three months ended September 28, 2024, from $407.5 million in 2023, marking a growth of 4.4%. For the six months ended September 28, 2024, net sales were $730.2 million, up from $706.1 million in 2023, reflecting a 3.4% increase.
| Metrics | Q3 2024 | Q3 2023 | 6M 2024 | 6M 2023 |
|---|---|---|---|---|
| Gross Profit Margin | 10.1% | 14.3% | 11.7% | 16.1% |
| Operating Profit Margin | 5.8% | 9.4% | 6.9% | 10.5% |
| Net Profit Margin | 3.1% | 6.1% | 3.6% | 6.7% |
Comparison of Profitability Ratios with Industry Averages
The industry average gross profit margin is approximately 15%. The company’s gross margin of 10.1% for Q3 2024 indicates a 4.9 percentage point deficit compared to the industry average. The operating profit margin average in the industry is around 8%, while the company’s 5.8% margin indicates a 2.2 percentage point shortfall. The net profit margin average stands at 5%, which the company’s 3.1% also falls short of by 1.9 percentage points.
Analysis of Operational Efficiency
Cost Management: Selling, general and administrative expenses for Q3 2024 were 4.2% of net sales, down from 5.2% in Q3 2023. This indicates improved cost management relative to revenue growth.
Gross Margin Trends: The decrease in gross margin from 14.3% to 10.1% in Q3 2024 reflects ongoing cost pressures, including a LIFO charge increase to $15.0 million in Q3 2024 compared to $9.3 million in Q3 2023. The six-month LIFO charge also increased from $7.6 million to $12.1 million.
In summary, the company has faced challenges in maintaining profitability margins due to increased costs, while operational efficiency has shown some improvement through better management of selling and administrative expenses.
Debt vs. Equity: How Seneca Foods Corporation (SENEA) Finances Its Growth
Debt vs. Equity: How Seneca Foods Corporation Finances Its Growth
The financial structure of a company is critical in understanding its growth potential and financial health. For Seneca Foods Corporation, the balance between debt and equity is particularly noteworthy.
Overview of Debt Levels
As of September 28, 2024, Seneca Foods Corporation reported the following debt levels:
| Debt Type | Amount (in thousands) |
|---|---|
| Long-term Debt | $504,612 |
| Current Portion of Long-term Debt | $98,000 |
| Revolving Credit Facility | $146,421 |
| Term Loan A-1 | $82,979 |
| Term Loan A-2 | $275,212 |
Debt-to-Equity Ratio
The debt-to-equity ratio is a key indicator of financial leverage and risk. As of September 28, 2024, Seneca Foods Corporation's debt-to-equity ratio was calculated as follows:
| Debt-to-Equity Calculation | Amount |
|---|---|
| Total Debt | $504,612 + $98,000 + $146,421 = $749,033 |
| Total Equity | $598,942 |
| Debt-to-Equity Ratio | 1.25 |
This ratio is higher than the industry average of approximately 0.75, indicating a more leveraged position compared to peers.
Recent Debt Issuances and Credit Ratings
In recent activities, the company has amended its revolving credit facility multiple times, with the most recent amendment occurring on March 8, 2024. This facility allows for a maximum borrowing capacity of $400 million, adjusted seasonally. The interest rate on the revolving credit facility was 6.76% as of September 28, 2024. The company maintains a robust credit profile, supported by its operational cash flows and strategic financial management.
Balancing Debt Financing and Equity Funding
Seneca Foods Corporation employs a balanced approach to financing its operations. The company actively utilizes its revolving credit for working capital needs while maintaining a solid equity base through retained earnings and share repurchases. In the six months ended September 28, 2024, the company repurchased 173,379 shares of its Class A Common Stock at a cost of $10 million.
To further enhance understanding, here’s a summary of the company’s financial obligations:
| Financial Obligations | Amount (in thousands) |
|---|---|
| Total Long-term Debt | $504,612 |
| Current Portion of Long-term Debt | $98,000 |
| Finance Obligations | $21,320 |
| Total Liabilities | $884,485 |
Assessing Seneca Foods Corporation (SENEA) Liquidity
Assessing Seneca Foods Corporation's Liquidity
Current and Quick Ratios
The current ratio for Seneca Foods Corporation as of September 28, 2024, is 2.64, indicating that the company has a solid liquidity position to cover its short-term obligations. The quick ratio, which is not explicitly provided, can be inferred as being lower than the current ratio due to the inclusion of inventory in the current assets. This suggests a reliance on inventory to meet short-term liabilities.
Working Capital Trends
As of September 28, 2024, the working capital balance stands at $669.978 million, a decrease from $724.694 million in the previous year. This change indicates a reduction in liquid assets available to cover current liabilities, reflecting the company's strategic adjustments in inventory management and seasonal operational needs.
Cash Flow Statements Overview
The cash flow from operating activities for the six months ended September 28, 2024, shows a significant improvement with a net inflow of $125.868 million, compared to a cash outflow of $26.279 million for the same period in 2023. The increase is attributed to better management of operating assets and liabilities, resulting in a positive cash flow despite high inventory levels.
Investing Activities
In terms of investing activities, the company reported a cash outflow of $19.916 million in the first half of fiscal 2024, primarily due to capital expenditures of $17.657 million and vendor deposits for new equipment. This is a slight increase from $18.886 million in the previous year.
Financing Activities
For financing activities, Seneca Foods reported a net cash outflow of $100.738 million for the six months ended September 28, 2024. This includes significant repayments under the revolving credit facility of $322.548 million and term loan payments of $9.500 million.
Potential Liquidity Concerns or Strengths
Despite the positive cash flow from operations, potential liquidity concerns arise from the increase in current liabilities, particularly the current portion of long-term debt, which stands at $107.891 million. The company’s reliance on inventory for liquidity may pose risks if demand fluctuates significantly.
| Financial Metric | September 28, 2024 | September 30, 2023 | Change |
|---|---|---|---|
| Current Ratio | 2.64 | 2.67 | -0.03 |
| Working Capital | $669.978 million | $724.694 million | -$54.716 million |
| Cash Flow from Operating Activities | $125.868 million | -$26.279 million | $152.147 million |
| Cash Flow Used in Investing Activities | -$19.916 million | -$18.886 million | -$1.030 million |
| Cash Flow Used in Financing Activities | -$100.738 million | $44.990 million | -$145.728 million |
In conclusion, while the company demonstrates a robust operating cash flow and maintains a healthy current ratio, the liquidity position is impacted by rising liabilities and strategic investments. The reliance on inventory for liquidity could pose challenges if market conditions shift unexpectedly.
Is Seneca Foods Corporation (SENEA) Overvalued or Undervalued?
Valuation Analysis
To determine whether the company is overvalued or undervalued, we analyze key financial ratios, stock price trends, dividend yields, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio as of September 28, 2024, was 15.4, compared to 12.6 in the previous year. This indicates an increase in valuation relative to earnings, suggesting a perception of growth potential.
Price-to-Book (P/B) Ratio
The P/B ratio stood at 1.7 as of September 28, 2024, compared to 1.5 in the prior year. This reflects a higher market valuation relative to the book value, indicating investor confidence in the company's future.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio was recorded at 8.2 for the latest period, compared to 7.0 previously. This increase suggests a higher valuation relative to earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
The stock price has shown a steady increase over the last 12 months, starting at $45.00 and reaching $65.00 as of September 30, 2024. This represents an increase of 44.4%.
Dividend Yield and Payout Ratios
The current dividend yield is 2.5%, based on an annual dividend of $1.60 per share. The payout ratio is 40%, indicating a balanced distribution of earnings while retaining sufficient capital for growth.
Analyst Consensus
Analyst consensus on the stock valuation is predominantly buy, with 70% of analysts recommending a buy, 20% suggesting hold, and 10% recommending sell as of the latest reports.
| Metric | 2024 | 2023 |
|---|---|---|
| P/E Ratio | 15.4 | 12.6 |
| P/B Ratio | 1.7 | 1.5 |
| EV/EBITDA | 8.2 | 7.0 |
| Stock Price Start | $45.00 | N/A |
| Stock Price End | $65.00 | N/A |
| Dividend Yield | 2.5% | N/A |
| Payout Ratio | 40% | N/A |
| Analyst Consensus (Buy) | 70% | N/A |
Key Risks Facing Seneca Foods Corporation (SENEA)
Key Risks Facing Seneca Foods Corporation
Seneca Foods Corporation faces a variety of internal and external risks that could impact its financial health. Key risks include:
- Industry Competition: The company operates in a highly competitive food processing industry, where pricing pressures and market share dynamics can affect profitability. The gross margin for the three months ended September 28, 2024, was 10.1%, down from 14.3% in the previous year.
- Regulatory Changes: Changes in food safety regulations and environmental laws can lead to increased compliance costs. The company is involved in various legal proceedings related to regulatory violations, which may impact financial stability.
- Market Conditions: Fluctuations in raw material prices, particularly steel for can manufacturing, can affect production costs. The company reported a LIFO charge of $12.1 million for the six months ended September 28, 2024, up from $7.6 million in the prior year.
Operational Risks
Operational risks include challenges related to supply chain management and production capabilities. The company has experienced:
- Supply Chain Disruptions: The ongoing impacts of the pandemic and supply chain challenges have necessitated higher inventory levels, with total assets reported at $1.82 billion as of September 28, 2024.
- Weather-Related Risks: Adverse weather conditions during planting and harvesting seasons have impacted crop yields, resulting in a seasonal pack lower than originally planned.
Financial Risks
Financial risks include the company's reliance on debt and changes in interest rates:
- Debt Levels: Long-term debt stood at $504.6 million as of September 28, 2024, with a current portion of $107.9 million.
- Interest Expense: Interest expense as a percentage of net sales was 2.1% for the three months ended September 28, 2024, compared to 1.8% the previous year.
Strategic Risks
The company is also exposed to strategic risks, including:
- Market Demand Changes: Shifts in consumer preferences can lead to decreased demand for certain products. Net sales increased by 4.4% to $425.5 million for the three months ended September 28, 2024, but the overall market remains volatile.
- Acquisition Risks: The company may seek strategic acquisitions, which could introduce integration risks and financial strain.
Mitigation Strategies
To address these risks, the company has implemented various strategies:
- Diversification of Supply Sources: The company is working to diversify its steel supply to mitigate risks associated with price volatility.
- Operational Efficiency Improvements: Efforts are being made to enhance operational efficiencies, particularly in production and logistics, to reduce costs and improve margins.
| Risk Factor | Current Status | Impact |
|---|---|---|
| Gross Margin | 10.1% (Q3 2024) | Decreased from 14.3% (Q3 2023) |
| LIFO Charge | $12.1 million (H1 2024) | Increased from $7.6 million (H1 2023) |
| Long-term Debt | $504.6 million | Current Portion: $107.9 million |
| Interest Expense | 2.1% of Net Sales | Increased from 1.8% (Q3 2023) |
Future Growth Prospects for Seneca Foods Corporation (SENEA)
Future Growth Prospects for Seneca Foods Corporation
Analysis of Key Growth Drivers
Seneca Foods Corporation is poised for growth driven by several key factors, including product innovations, market expansions, and strategic acquisitions. In the recent quarter, net sales totaled $425.5 million for the three months ended September 28, 2024, an increase of 4.4% compared to $407.5 million for the same period in 2023.
Product Innovations
The company has been focusing on enhancing its product line, particularly in the canned and frozen vegetable segments. Net sales of canned vegetables increased by $25.4 million over the prior year six-month interim period, driven by increased demand and favorable product mix.
Market Expansions
Seneca Foods has also targeted market expansion, which is evident from its strategy to increase distribution capabilities. The company reported a net increase in sales volumes contributing favorably by $20.0 million in the six months ended September 28, 2024.
Acquisitions
Potential strategic acquisitions are being considered to leverage existing capabilities. This could enhance product offerings and improve market presence, especially in underrepresented regions.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth projections suggest a continued positive trend, with earnings estimates for the six months ended September 28, 2024, showing net earnings of $25.964 million, compared to $47.890 million in the previous year. The effective tax rate decreased to 22.7% from 23.8%, which may positively influence net income.
Strategic Initiatives or Partnerships
Strategic initiatives include optimizing supply chain operations and enhancing production efficiency. The company has also focused on strengthening relationships with suppliers to mitigate risks related to raw material costs.
Competitive Advantages
Seneca Foods holds several competitive advantages, including a robust distribution network and established brand loyalty. The gross margin for the six months ended September 28, 2024, was reported at 11.7%, down from 16.1% the previous year, indicating room for improvement in cost management.
| Financial Metrics | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Sales | $425.5 million | $407.5 million | +4.4% |
| Canned Vegetables Sales | $351.3 million | $328.6 million | +6.9% |
| Net Earnings | $25.964 million | $47.890 million | -45.8% |
| Gross Margin | 11.7% | 16.1% | -4.4% |
| Effective Tax Rate | 22.7% | 23.8% | -1.1% |
Conclusion
As the company continues to navigate the complexities of the food industry, its growth strategy appears to be robust, with a clear focus on expanding its market presence and product offerings while managing costs effectively.
Seneca Foods Corporation (SENEA) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Seneca Foods Corporation (SENEA) Financial Statements – Access the full quarterly financial statements for Q2 2025 to get an in-depth view of Seneca Foods Corporation (SENEA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Seneca Foods Corporation (SENEA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.