Seneca Foods Corp

Previous wording

We experienced material cost increases to various production inputs during the last several years due to a number of factors, including but not limited to, supply chain disruptions, steel supply and pricing, raw material shortages, labor shortages, and the conflicts between Russia and Ukraine. While we have no direct exposure to this foreign conflict, it had a negative impact on the global economy which increased certain of our input costs. While some of the factors mentioned above have started to ease and stabilize during the current nine-month interim period, our costs remain elevated as compared to historical levels.

Current wording

We experienced material cost increases to various production inputs during the last several years due to a number of factors, including but not limited to, supply chain disruptions, steel supply and pricing, raw material shortages, labor shortages, and the conflict between Russia and Ukraine. While we have no direct exposure to this foreign conflict, it had a negative impact on the global economy which increased certain of our input costs. While some of the factors mentioned above have started to ease and stabilize, our costs remain elevated as compared to historical levels.

Previous wording

Net sales totaled $1,233.0 million for the nine months ended December 28, 2024 as compared with $1,150.6 million for the nine months ended December 30, 2023. The overall net sales increase of $82.4 million, or 7.2%, was mainly due to higher sales volumes contributing favorability of $87.3 million as compared to the prior year nine-month interim period. Partially offsetting that amount was net unfavorable sales of $4.9 million driven by a combination of reduced selling prices and the impact of product mix as compared to the prior year nine-month interim period.

Current wording

Net sales totaled $297.5 million for the three months ended June 28, 2025 as compared with $304.7 million for the three months ended June 29, 2024. The overall net sales decrease of $7.2 million, or 2.4%, was driven by lower sales volumes contributing a decrease of $13.6 million, partially offset by higher selling prices and the impact of product mix which contributed a favorable $6.4 million as compared to the prior year quarter.

Previous wording

Net sales of canned vegetables and frozen vegetables increased by a combined $53.0 million over the prior year quarter. The categories experienced favorable demand driving $66.3 million in higher sales volume, which was partially offset by $13.3 million contributed by lower pricing. Net sales in the fruit products category increased by $3.5 million driven by $2.4 million of increased sales volume and $1.1 million due to higher selling prices and product mix. The snack products category contributed a net sales increase of $1.2 million mainly due to increased sales volume. Lastly, net sales attributable to the other category contributed a nominal $0.7 million increase as compared to the prior year quarter for seed, cans and ends, and outside revenue from aircraft operations, which are ancillary to the Company’s main operations.

Current wording

Net sales of canned vegetables and frozen vegetables decreased by a combined $8.8 million over the prior year quarter. The categories experienced a decrease in sales volume equating to $14.2 million, which was partially offset by $5.4 million from higher pricing. Net sales in the fruit products category decreased $0.8 million largely driven by lower selling prices and product mix. The snack products category contributed a net sales increase of $0.7 million mainly due to higher sales volume. Lastly, net sales attributable to the other category increased $1.6 million as compared to the prior year quarter for seed, cans and ends, and outside revenue from aircraft operations, which are ancillary to the Company’s main operations.

Previous wording

Gross Margin: Gross margin for the three months ended December 28, 2024 was 9.8% as compared to 12.2% for the three months ended December 30, 2023. The decrease in gross margin for the three months ended December 28, 2024 was mainly due to continued elevated costs, which outpaced the increase in net sales as compared to the three months ended December 30, 2023. Finished goods sold by the Company during the current three-month interim period consisted of products produced during either the preceding year or current year seasonal packs; both of which have a higher cost on a per unit basis as compared to the prior year three-month period. Refer to the business trends section above and the material cash requirements section below for additional discussion of the factors impacting the respective seasonal packs. The Company’s LIFO charge for the three months ended December 28, 2024 was $10.9 million as compared to a LIFO charge of $12.0 million for the three months ended December 30, 2023. The LIFO charge amounts have the impact of increasing cost of products sold.

Current wording

Gross Margin: Gross margin for the three months ended June 28, 2025 was 14.1% as compared to 14.0% for the three months ended June 29, 2024. Gross margin was relatively flat when comparing the year-over-year quarterly periods because although the Company continues to experience elevated costs in fiscal year 2026, the current quarter benefited from a larger LIFO credit thereby reducing the cost of products sold. The Company’s LIFO credit for the three months ended June 28, 2025 was $11.8 million as compared to a LIFO credit of $2.9 million for the three months ended June 29, 2024. Finished goods sold by the Company during the current quarter consisted of products produced during the preceding year seasonal pack, which have a higher cost on a per unit basis as compared to finished goods sold during the prior year quarter. Refer to the business trends section above and the material cash requirements section below for additional discussion of the factors impacting the respective seasonal pack.

Previous wording

Selling, General, and Administrative: Selling, general and administrative expense for the three months ended December 28, 2024 decreased $0.2 million from the three months ended December 30, 2023. Selling, general, and administrative expense as a percentage of net sales for the three months ended December 28, 2024, was 4.5% as compared with 5.2% for the prior year quarter. The decrease in selling, general, and administrative expense as a percentage of net sales was mainly due to the increase in net sales and the fixed nature of certain expenses.

Current wording

Selling, General, and Administrative: Selling, general and administrative expense for the three months ended June 28, 2025 increased $1.3 million from the three months ended June 29, 2024. Selling, general, and administrative expense as a percentage of net sales for the three months ended June 28, 2025, was 6.3% as compared with 5.7% for the prior year quarter. The increase in selling, general, and administrative expense as a percentage of net sales was mainly driven by the decrease in net sales and the fixed nature of certain expenses.

Previous wording

Other Operating Expense, net: The Company had net other operating expense of $0.8 million during the three months ended December 28, 2024, primarily driven by $1.0 million for disposal of various spare equipment. During the three months ended December 30, 2023, the Company had net other operating expense of $0.4 million, which was driven primarily by $0.6 million of transition service fees incurred in connection with the asset acquisition that occurred during the quarter.

Current wording

Other Operating Income, net: The Company had net other operating income of $0.1 million during the three months ended June 28, 2025, which was driven primarily by the sale of various spare equipment. During the three months ended June 29, 2024, the Company had net other operating income of $0.2 million, which was driven primarily by the sale of a small portion of land in the Midwest.

Previous wording

Other Non-Operating Income: Other non-operating income totaled $1.5 million and $1.8 million for the three months ended December 28, 2024, and December 30, 2023, respectively, and is comprised of the non-service related pension amounts that are actuarially determined.

Current wording

Other Non-Operating Income: Other non-operating income totaled $1.9 million and $1.4 million for the three months ended June 28, 2025 and June 29, 2024, respectively, and is comprised of the non-service related pension amounts that are actuarially determined.

Previous wording

Interest Expense, net: Interest expense as a percentage of net sales was 1.6% for the three months ended December 28, 2024, as compared to 2.1% for the three months ended December 30, 2023. Interest expense decreased from $9.4 million in the prior year quarter to $7.8 million for the current quarter primarily driven by lower average borrowings outstanding under the Company’s revolving credit facility as compared to the prior year quarter.

Current wording

Interest Expense, net: Interest expense as a percentage of net sales was 1.8% for the three months ended June 28, 2025, as compared to 3.4% for the three months ended June 29, 2024. Interest expense decreased from $10.3 million in the prior year quarter to $5.4 million in the current quarter primarily driven by lower average borrowings outstanding under the Company’s revolving credit facility and a lower weighted average interest rate as compared to the prior year quarter.

Previous wording

The financial condition of the Company is summarized in the following table and explanatory review (dollar amounts in thousands, except per share data):

Current wording

Selected financial data of the Company is summarized in the following table and explanatory review (dollar amounts in thousands, except per share data):

Previous wording

From the standpoint of available inventory, the Company’s larger seasonal pack sizes in fiscal year 2024 driven by favorable growing conditions, coupled with lower fiscal year 2024 sales, resulted in higher inventory levels for finished goods as of the end of fiscal year 2024. These higher inventory levels provided the Company with additional availability of products leading into fiscal year 2025, resulting in a lower planned seasonal pack and the opportunity to normalize working capital trends, specifically surrounding inventory.

Current wording

From the standpoint of available inventory, the Company’s larger seasonal pack sizes in fiscal year 2024 driven by favorable growing conditions, coupled with lower sales, resulted in higher inventory levels for finished goods as of the end of fiscal year 2024. These higher inventory levels provided the Company with additional availability of products leading into fiscal year 2025, resulting in a lower planned seasonal pack and the opportunity to normalize working capital trends, specifically surrounding inventory.

Previous wording

During the current fiscal year, the Company has experienced an easing of working capital needs driven by the factors previously mentioned. However, adverse weather conditions during the planting and harvesting seasons have had a notable impact, especially in the upper Midwest where the Company has its primary growing region. Challenging growing conditions and reduced crop yields resulted in a seasonal pack that is lower than originally planned. This in turn has resulted in a higher-cost seasonal pack on a per unit basis as of the nine months ended December 28, 2024; however, the overall costs from a cash requirements perspective are favorable as compared to the preceding fiscal years.

Current wording

During fiscal year 2025, the Company experienced an easing of working capital needs driven by the factors previously mentioned. However, adverse weather conditions during the planting and harvesting seasons had a notable impact, especially in the upper Midwest where the Company has its primary growing region. Challenging growing conditions and reduced crop yields resulted in a seasonal pack lower than originally planned. This in turn resulted in a higher-cost seasonal pack on a per unit basis for fiscal year 2025; however, the overall costs from a cash requirements perspective are favorable as compared to the preceding fiscal years.

Previous wording

The Company believes that its operations along with existing liquidity sources will satisfy its cash requirements for at least the next twelve months. This includes the Company’s expectation with respect to Term Loan A-1 that matures on June 1, 2025, that it will maintain or have access to sufficient liquidity to retire or refinance long-term debt at maturity or otherwise, using operating cash flows, access to the capital markets, and access to its revolving credit facility. The Company has borrowed funds and continues to believe that it has the ability to do so at reasonable interest rates, however additional borrowings would result in increased interest expense. The Company does not have any off-balance sheet financing arrangements.

Current wording

The Company believes that its operations along with existing liquidity sources will satisfy its cash requirements for at least the next twelve months. The Company has borrowed funds and continues to believe that it has the ability to do so at reasonable interest rates; however additional borrowings would result in increased interest expense. The Company does not have any off-balance sheet financing arrangements.

Previous wording

For the nine months ended December 30, 2023, cash used in operating activities was $128.1 million, which consisted of a use of cash of $249.4 million by operating assets and liabilities partially offset by net earnings of $65.6 million, adjusted by non-cash charges of $55.7 million. The non-cash charges were largely driven by $32.7 million of depreciation and amortization, $5.3 million of non-cash lease expense, and a $19.6 million LIFO charge. The change in operating assets and liabilities was due to inventories being a use of cash as the nine-month period covered the primary seasonal pack harvest months, in addition to material cost inflation affecting various production inputs. The increase in inventories was also impacted by finished goods acquired in the asset acquisition which occurred during the nine-month period.

Current wording

Net Cash Provided by Operating Activities**:** For the three months ended June 28, 2025, cash provided by operating activities was $53.7 million, which consisted of $38.9 million from changes in operating assets and liabilities, coupled with net earnings of $14.9 million and partially offset by non-cash charges of $0.1 million. The non-cash charges were mainly comprised of $11.1 million of depreciation and amortization and $0.9 million of non-cash lease expense, largely offset by a $11.8 million LIFO credit. The change in operating assets and liabilities was mainly impacted by inventories being a use of cash as the early stages of the Company’s seasonal pack commenced during the quarter.

Previous wording

Net Cash Provided by (Used in) Operating Activities**:** For the nine months ended December 28, 2024, cash provided by operating activities was $243.6 million, which consisted of $142.8 million from changes in operating assets and liabilities, coupled with net earnings of $40.6 million and non-cash charges of $60.2 million. The non-cash charges were mainly comprised of $33.6 million of depreciation and amortization, $4.0 million of non-cash lease expense, and a $23.0 million LIFO charge. The change in operating assets and liabilities was favorably impacted by improved working capital needs during the nine-month period which covered the primary seasonal pack harvest months. The Company experienced a lower utilization of cash for inventories resulting from the higher inventory levels carried into the current fiscal year along with a reduced fiscal year 2025 seasonal pack due to adverse weather conditions. This is consistent with the factors discussed above within the material cash requirements section.

Current wording

For the three months ended June 29, 2024, cash provided by operating activities was $50.3 million, which consisted of $28.3 million for operating assets and liabilities, coupled with net earnings of $12.7 million and non-cash charges of $9.3 million. The non-cash charges were largely driven by $10.8 million of depreciation and amortization and $1.6 million of non-cash lease expense, partially offset by a $2.9 million LIFO credit. The change in operating assets and liabilities was due to inventories contributing favorably as the strategic approach discussed above within the material cash requirements section resulted in lower working capital needs, especially for steel, during the prior year three-month period.

Previous wording

Net cash used in investing activities was $23.8 million for the nine months ended December 30, 2023, and consisted of cash used for capital expenditures of $31.8 million partially offset by proceeds from the sale of assets totaling $8.0 million.

Current wording

Net Cash Used in Investing Activities**:**Net cash used in investing activities was $11.2 million for the three months ended June 28, 2025, and consisted of cash used for capital expenditures of $11.3 million, partially offset by proceeds from the sale of assets totaling $0.1 million.

Previous wording

Net Cash Used in Investing Activities**:**Net cash used in investing activities was $28.9 million for the nine months ended December 28, 2024, and consisted of cash used for capital expenditures of $26.7 million and $2.7 million paid as deposits to vendors for the installation of a new can manufacturing line. Offsetting those amounts, the Company received proceeds from the sale of assets totaling $0.5 million.

Current wording

Net cash used in investing activities was $13.4 million for the three months ended June 29, 2024, and consisted of cash used for capital expenditures of $12.1 million and $1.7 million paid as deposits to vendors for a new can manufacturing line. Partially offsetting those amounts, the Company received proceeds from the sale of assets totaling $0.4 million.

Previous wording

Net Cash (Used in) Provided by Financing Activities**:** Net cash used in financing activities was $213.7 million for the nine months ended December 28, 2024, driven primarily by a net paydown on the Company’s revolving credit facility of $195.0 million. The Company also made payments totaling $14.9 million on its term loans and finance obligation during the nine-month period. Offsetting the outflows was a $12.4 million increase in note payable borrowings associated with the Company’s new can manufacturing line which was converted to a finance obligation during the nine-month period. Additionally, the Company used cash of $10.8 million to purchase treasury stock and made payments of $3.8 million on financing leases.

Current wording

Net cash used in financing activities was $35.8 million for the three months ended June 29, 2024, driven primarily by a net paydown on the Company’s revolving credit facility of $28.0 million and term loan payments of $4.8 million during the quarter. Additionally, the Company used cash of $6.6 million to purchase treasury stock and made payments of $1.4 million on finance leases. Partially offsetting the payments was a $5.0 million increase in the note payable borrowings associated with the Company’s new can manufacturing line.

Previous wording

The Company’s production cycle begins with planting in the spring followed by harvesting and packaging during the second and third fiscal quarters with sales spanning over the following twelve months. Minimal food packaging occurs in the Company's last fiscal quarter ending March 31, which is the optimal time for maintenance, repairs and equipment changes in its packaging plants. The supply of commodities, current pricing, and expected new crop quantity and quality affect the timing and amount of the Company’s sales and earnings. When the seasonal harvesting periods of the Company's major vegetables are newly completed, inventories for these packaged vegetables are at their highest levels. For peas, the peak inventory time is mid-summer and for corn and green beans, the Company's highest volume vegetables, the peak inventory is in mid-autumn. The seasonal nature of the Company’s production cycle results in inventory and accounts payable reaching their lowest point in mid-to-late first quarter prior to the new seasonal pack commencing. As the seasonal pack progresses, these components of working capital both increase until the pack is complete.

Current wording

The Company’s production cycle begins with planting in the spring followed by harvesting and packaging during the second and third fiscal quarters with sales spanning over the following twelve months. Minimal food packaging occurs in the Company's last fiscal quarter ending March 31, which is the optimal time for maintenance, repairs and equipment changes in its packaging plants. The supply of commodities, current pricing, and expected new crop quantity and quality affect the timing and amount of the Company’s sales and earnings. When the seasonal harvesting periods of the Company's major vegetables are newly completed, inventories for these packaged vegetables are at their highest levels. For peas, the peak inventory time is mid-summer and for sweet corn and green beans, the Company's highest volume vegetables, the peak inventory is in mid-autumn. The seasonal nature of the Company’s production cycle results in inventory and accounts payable typically reaching their lowest point in mid-to-late first quarter prior to the new seasonal pack commencing. As the seasonal pack progresses, these components of working capital both increase until the pack is complete.

Previous wording

The Company’s fruit and vegetable sales exhibit seasonal increases in the third fiscal quarter due to increased retail demand during the holiday seasons. In addition, the Company sells canned and frozen vegetables to a co-pack customer on a bill and hold basis during the pack cycle, the majority of which typically occurs in the second and third quarters. The seasonal nature of the Company’s sales, particularly holiday driven retail sales, result in the accounts receivable balance reaching its highest point at the end of the second and third fiscal quarters, while typically being the lowest at the end of the first quarter.

Current wording

The Company’s fruit and vegetable sales exhibit seasonal increases in the third fiscal quarter due to increased retail demand during the holiday season. In addition, the Company sells canned and frozen vegetables to a co-pack customer on a bill and hold basis during the pack cycle, which typically occurs in the second and third quarters. Given the seasonal nature of the Company’s sales, the accounts receivable balance typically reaches its highest point at the end of the second fiscal quarter.

Previous wording

A description of the Company's critical accounting estimates is contained in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024. There were no material changes to the Company's critical accounting policies or estimates during the nine months ended December 28, 2024.

Current wording

A description of the Company's critical accounting estimates is contained in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025. There were no material changes to the Company's critical accounting policies or estimates during the three months ended June 28, 2025.