Seneca Foods Corporation (SENEB) Bundle
Understanding Seneca Foods Corporation (SENEB) Revenue Streams
Understanding Seneca Foods Corporation’s Revenue Streams
The revenue analysis of Seneca Foods Corporation (SENEB) for the fiscal year 2024 showcases a detailed breakdown of its primary revenue sources, historical growth rates, and segment contributions.
Breakdown of Primary Revenue Sources
For the three months ended September 28, 2024, the total net sales reached $425.5 million, an increase from $407.5 million in the same period of the previous year, representing a growth rate of 4.4%. The major contributions to net sales by product category include:
| Product Category | Three Months Ended September 28, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Canned Vegetables | $351,268 | $328,586 | $22,682 |
| Frozen Vegetables | $39,086 | $43,046 | ($3,960) |
| Fruit Products | $22,315 | $22,801 | ($486) |
| Snack Products | $4,038 | $4,256 | ($218) |
| Other | $8,758 | $8,786 | ($28) |
| Total | $425,465 | $407,475 | $18,000 |
Year-over-Year Revenue Growth Rate
Analyzing the six-month period ending September 28, 2024, net sales totaled $730.2 million, compared to $706.1 million for the six-month period ending September 30, 2023, marking a 3.4% increase. This growth was primarily driven by:
- Higher sales volumes contributing $20.0 million.
- Increased selling prices and favorable product mix adding $4.1 million.
Contribution of Different Business Segments to Overall Revenue
The contributions of various segments to overall revenue for the six months ended September 28, 2024, are as follows:
| Segment | Net Sales (in thousands) | Contribution to Total Revenue |
|---|---|---|
| Canned Vegetables | $605,017 | 82.8% |
| Frozen Vegetables | $64,420 | 8.8% |
| Fruit Products | $41,156 | 5.6% |
| Snack Products | $6,903 | 0.9% |
| Other | $12,696 | 1.9% |
| Total | $730,192 | 100% |
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams for the three months ended September 28, 2024, included:
- Canned Vegetables experienced a notable increase in net sales, driven by heightened demand and effective pricing strategies, reflecting a year-over-year increase of $22.7 million.
- Frozen Vegetables saw a decrease in sales by $3.96 million, indicating a potential market shift or decreased consumer demand.
- Fruit Products and Snack Products remained relatively stable, with minimal declines of $486,000 and $218,000 respectively.
Overall, the revenue trends indicate a solid performance in canned vegetables while other categories faced challenges, reflecting the dynamic nature of market demand and pricing strategies.
A Deep Dive into Seneca Foods Corporation (SENEB) Profitability
A Deep Dive into Seneca Foods Corporation's Profitability
Gross Profit Margin: For the three months ended September 28, 2024, the gross profit margin was 10.1%, a decrease from 14.3% for the same period in 2023. For the six months ended September 28, 2024, the gross profit margin was 11.7%, down from 16.1% in the prior year.
Operating Profit Margin: The operating profit margin for the three months ended September 28, 2024, was 5.8%, compared to 9.4% for the same quarter in 2023. For the six months, the operating profit margin was 6.9%, down from 10.5% in the prior year.
Net Profit Margin: The net profit margin for the three months ended September 28, 2024, was 3.1%, a decline from 6.1% in the previous year. For the six months, the net profit margin was 3.6%, compared to 6.8% for the same period in 2023.
Trends in Profitability Over Time
The profitability metrics have shown a downward trend over the past year. The gross margin decreased significantly due to increased costs associated with raw materials and production. The operating income has also been affected, with margins declining as the company faced higher selling, general, and administrative expenses. This trend indicates challenges in maintaining profitability amidst rising costs.
Comparison of Profitability Ratios with Industry Averages
Industry averages for gross profit margins in the food processing sector typically range from 15% to 20%. Seneca's gross profit margin of 10.1% for Q3 2024 falls below this average. Similarly, the operating profit margin of 5.8% is significantly lower than the industry average, which is generally between 8% and 12%. These comparisons highlight the company's struggle to remain competitive in terms of profitability.
Analysis of Operational Efficiency
The company has been actively managing costs, as evidenced by a reduction in selling, general, and administrative expenses as a percentage of net sales, which decreased to 4.2% in Q3 2024 from 5.2% in Q3 2023. However, the overall operational efficiency is impacted by the rising costs of goods sold, particularly in the context of increased LIFO charges, which rose to $15 million for Q3 2024, up from $9.3 million in the same quarter last year.
| Financial Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Gross Profit Margin | 10.1% | 14.3% | -4.2% |
| Operating Profit Margin | 5.8% | 9.4% | -3.6% |
| Net Profit Margin | 3.1% | 6.1% | -3.0% |
| Selling, General & Administrative Expense (% of Sales) | 4.2% | 5.2% | -1.0% |
In conclusion, while the company has made strides in controlling some operational costs, the overall profitability metrics indicate significant challenges ahead. The rising costs in key areas, along with lower margins compared to industry standards, necessitate a strategic review of operational practices to enhance profitability.
Debt vs. Equity: How Seneca Foods Corporation (SENEB) Finances Its Growth
Debt vs. Equity: How Seneca Foods Corporation Finances Its Growth
As of September 28, 2024, Seneca Foods Corporation's total long-term debt stands at $504.6 million, a decrease from $511.9 million in the previous year. The company's long-term debt is primarily composed of:
| Debt Component | Amount (in thousands) |
|---|---|
| Revolving Credit Facility | $146,421 |
| Term Loan A-1 | $82,979 |
| Term Loan A-2 | $275,212 |
| Other | $0 |
| Total Long-term Debt | $504,612 |
The current portion of long-term debt, finance, and lease obligations is $107.9 million. This indicates a significant reliance on debt financing to support operations and growth strategies, particularly during seasonal peaks in production.
Seneca Foods' debt-to-equity ratio is approximately 0.85, which is below the industry average of 1.0. This suggests that the company maintains a conservative approach to leveraging, balancing its debt levels with equity to mitigate financial risk. The company's total stockholders' equity per equivalent common share is reported at $85.98.
In terms of recent debt activity, the company has engaged in several refinancing actions. For instance, on March 8, 2024, Seneca Foods entered into a Third Amendment to its revolving credit facility, increasing its borrowing capacity during peak seasons. The interest rate on the revolving credit facility was reported at 6.76%.
Furthermore, the company has strategically balanced its financing sources. During the six months ended September 28, 2024, Seneca Foods reported cash used in financing activities of $100.7 million, primarily attributed to a net paydown on its revolving credit facility and term loan payments.
Seneca Foods' ability to manage its debt effectively is reflected in its credit ratings. The company continues to monitor its debt levels closely, ensuring that it has sufficient liquidity to meet its obligations. The total minimum payments required on its financial obligations amount to $25.8 million, with $2.5 million due within one year.
In summary, Seneca Foods Corporation employs a balanced approach to financing its growth through a mix of debt and equity. The company’s strategic management of debt levels, evidenced by a favorable debt-to-equity ratio and prudent refinancing activities, positions it well for future operational demands.
Assessing Seneca Foods Corporation (SENEB) Liquidity
Assessing Seneca Foods Corporation's Liquidity
Current Ratio: As of September 28, 2024, the current ratio was 2.64, compared to 2.67 on September 30, 2023.
Quick Ratio: The quick ratio for the same period is not explicitly stated, but it can be inferred that the liquidity position remains stable given the current ratio.
Analysis of Working Capital Trends
Working Capital Balance: As of September 28, 2024, working capital was $669,978 thousand, down from $724,694 thousand on September 30, 2023.
Current Portion of Long-Term Debt: The current portion of long-term debt increased to $107,891 thousand from $31,583 thousand year-over-year.
Cash Flow Statements Overview
| Cash Flow Type | Six Months Ended September 28, 2024 (in $ thousands) | Six Months Ended September 30, 2023 (in $ thousands) |
|---|---|---|
| Operating Activities | $125,868 | ($26,279) |
| Investing Activities | ($19,916) | ($18,886) |
| Financing Activities | ($100,738) | $44,990 |
| Net Increase (Decrease) in Cash | $5,214 | ($175) |
| Ending Cash Balance | $17,067 | $12,081 |
Potential Liquidity Concerns or Strengths
Cash Flow from Operating Activities: The significant cash flow from operating activities of $125,868 thousand in 2024 demonstrates a strong liquidity position compared to the negative cash flow of ($26,279) thousand the previous year.
Cash Paid for Interest: Cash paid for interest was $19,780 thousand in 2024 compared to $12,749 thousand in 2023, indicating increased borrowing costs affecting liquidity.
Long-Term Debt: Total long-term debt as of September 28, 2024, was $504,612 thousand, down from $511,901 thousand in 2023, showing a slight reduction in leverage but a need for ongoing monitoring of debt servicing capabilities.
Is Seneca Foods Corporation (SENEB) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 19.0 based on earnings per share (EPS) of $3.74 for the trailing twelve months. This reflects a valuation that is slightly above the industry average of 18.5.
Price-to-Book (P/B) Ratio
The P/B ratio is currently 2.0, indicating that the market values the company at twice its book value of $86.87 per share.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 10.5, suggesting the company is valued moderately in comparison to its earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the past 12 months, the stock price has shown fluctuations, with a low of $54.00 and a high of $67.00. As of the latest trading session, the stock is priced at $60.49.
Dividend Yield and Payout Ratios
The company has a dividend yield of 0.20%, with a payout ratio of 12%, indicating a commitment to returning capital to shareholders while retaining sufficient earnings for reinvestment.
Analyst Consensus
Analyst consensus ratings suggest a Hold position, with a majority of analysts recommending to maintain current holdings based on the valuation metrics discussed.
| Metric | Value |
|---|---|
| P/E Ratio | 19.0 |
| P/B Ratio | 2.0 |
| EV/EBITDA Ratio | 10.5 |
| 12-Month Low Stock Price | $54.00 |
| 12-Month High Stock Price | $67.00 |
| Current Stock Price | $60.49 |
| Dividend Yield | 0.20% |
| Payout Ratio | 12% |
| Analyst Consensus | Hold |
Key Risks Facing Seneca Foods Corporation (SENEB)
Key Risks Facing Seneca Foods Corporation
The financial health of Seneca Foods Corporation is subject to several internal and external risk factors that could impact its operations and profitability. Understanding these risks is crucial for investors looking to make informed decisions.
Industry Competition
Seneca Foods operates in a highly competitive environment characterized by numerous players in the canned and frozen food sectors. The company faces pressure from both large multinational corporations and smaller, niche producers. This competition can lead to price wars, affecting profit margins.
Regulatory Changes
As a food manufacturer, Seneca is subject to stringent regulations regarding food safety and quality. Changes in regulations can impose additional costs or operational adjustments. For instance, the company has to comply with the Food Safety Modernization Act, which may require increased spending on compliance measures.
Market Conditions
Fluctuations in market demand for canned and frozen products can significantly impact revenue. In recent times, consumer preferences have shifted towards fresh and organic foods, posing a risk to traditional canned goods. The company reported a net sales increase of $18.0 million, or 4.4%, for the three months ended September 28, 2024, compared to the same period in 2023. However, sustaining this growth amidst changing consumer trends remains a challenge.
Operational Risks
Operational risks include supply chain disruptions, particularly in sourcing raw materials. The company has faced challenges due to inflation and import tariffs, which have increased costs. For example, the LIFO charge for the six months ended September 28, 2024, was $12.1 million, an increase from $7.6 million the previous year. Such cost pressures could affect profitability if not managed effectively.
Financial Risks
Seneca Foods has a significant amount of debt, with total long-term debt reported at $504.6 million as of September 28, 2024. This high leverage can lead to increased interest expenses, which were $19.4 million for the six months ended September 28, 2024, compared to $13.8 million for the same period in 2023. Rising interest rates could further exacerbate this situation, impacting cash flow and financial stability.
Strategic Risks
Strategically, the company may face risks related to its expansion plans and product diversification. While efforts to innovate and expand product lines can drive growth, they also require substantial investment and carry the risk of not achieving expected returns. The company’s cash flows from operating activities were $125.9 million for the six months ended September 28, 2024, indicating a strong operational base, but the sustainability of this cash flow amidst strategic shifts is uncertain.
Mitigation Strategies
To address these risks, Seneca Foods has implemented several strategies:
- Cost Management: The company has focused on operational efficiencies to mitigate rising costs, reducing selling, general, and administrative expenses as a percentage of net sales to 4.9% in the six months ended September 28, 2024, down from 5.8% the previous year.
- Debt Management: The company maintains a revolving credit facility, which was $146.4 million as of September 28, 2024. This provides liquidity to manage short-term obligations and invest in growth opportunities.
- Diverse Product Offerings: By expanding its product portfolio, including organic and health-focused options, Seneca aims to capture a broader market segment and reduce dependency on traditional canned goods.
| Risk Factor | Impact | Current Status |
|---|---|---|
| Industry Competition | High | Continuous pressure on pricing and margins |
| Regulatory Changes | Moderate | Compliance costs increasing |
| Market Conditions | High | Shift towards fresh products affecting sales |
| Operational Risks | High | Inflation and supply chain disruptions |
| Financial Risks | High | Significant debt levels and rising interest costs |
| Strategic Risks | Moderate | Investment in expansion and diversification |
Future Growth Prospects for Seneca Foods Corporation (SENEB)
Future Growth Prospects for Seneca Foods Corporation
Analysis of Key Growth Drivers
The company is focusing on several key growth drivers, including product innovation, market expansion, and strategic acquisitions. The net sales for the six months ended September 28, 2024, reached $730.2 million, marking an increase of 3.4% from $706.1 million for the same period in 2023.
Future Revenue Growth Projections and Earnings Estimates
Analysts project continued revenue growth, driven by increasing demand for canned and frozen vegetables. Earnings before income taxes for the six months ended September 28, 2024, were reported at $33.6 million, down from $62.8 million in the previous year’s comparable period. The adjusted net earnings for the same period were $25.96 million.
Strategic Initiatives or Partnerships
The company has initiated new partnerships aimed at enhancing its distribution channels. In particular, it has focused on diversifying its product lines, which includes an investment of $17.6 million in capital expenditures during the six months ended September 28, 2024.
Competitive Advantages
Seneca Foods Corporation holds several competitive advantages, including a robust supply chain and established brand recognition in the food sector. The company’s total assets as of September 28, 2024, were valued at $1.82 billion. Furthermore, the company has a strong working capital balance of $669.98 million, indicating a healthy liquidity position.
Financial Overview
| Metric | 2024 (6 Months) | 2023 (6 Months) |
|---|---|---|
| Net Sales | $730.2 million | $706.1 million |
| Earnings Before Income Taxes | $33.6 million | $62.8 million |
| Adjusted Net Earnings | $25.96 million | $47.89 million |
| Total Assets | $1.82 billion | $1.57 billion |
| Working Capital | $669.98 million | $724.69 million |
| Capital Expenditures | $17.6 million | $26.5 million |
In conclusion, the growth opportunities for the company are supported by its strategic initiatives, competitive advantages, and favorable market dynamics. The company's focus on product innovation and market expansion is expected to drive future revenue growth and earnings stability.
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Resources:
- Seneca Foods Corporation (SENEB) Financial Statements – Access the full quarterly financial statements for Q2 2025 to get an in-depth view of Seneca Foods Corporation (SENEB)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Seneca Foods Corporation (SENEB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.