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Seneca Foods expects price oasis with drought

Rochester Business Journal
August 17, 2012

The drought affecting much of the nation may end up helping Seneca Foods Corp., its leader said recently.

"Generally when a drought occurs, selling prices firm and we can earn a decent living," said Kraig Kayser, president and CEO. "This should be the case this time around. It is still too early to really know the impact of this weather crisis on our company, but generally it should have a positive impact on our business."
 
Kayser made the remarks at Seneca Foods' annual meeting Aug. 2 in Wisconsin. He shared some of his comments, following the meeting, with the Rochester Business Journal.
 
During the meeting, Kayser spoke of the firm's financial performance over the past few years, noting that fiscal 2012-which ended March 30-showed an improvement over the prior year, with inventory levels returning to normal and the company posting a profit.
 
While the business will continue to pursue acquisition opportunities, much of the firm's growth has come through good capital projects or the company's acquisition of its own stock, he said.
 
"The Seneca story has been a consistent one over our 63-year history," Kayser said. "We manage for cash, not reported earnings."
 
Seneca Foods had cash and cash equivalents totaling $9.4 million at the end of fiscal 2012, up from $4.8 million in fiscal 2011.
 
Kayser said the big difference affecting the two fiscal years was a non-cash, after-tax, last-in-first-out charge of $30.7 million in 2012, versus a $3.4 million LIFO credit to earnings in 2011.
 
If the company had been using the FIFO asset-management and valuation method it used prior to fiscal 2008, Seneca Foods would have reported net earnings of $3.44 a share in fiscal 2012, which would have been the third-best year in company history.
 
Last week, Seneca Foods reported a 10 percent drop in first-quarter sales. The firm posted a profit compared with a net loss a year ago.
 
The food processor, which is based in Marion, Wayne County, reported earnings of $8.2 million, or 67 cents a diluted share, versus a net loss of $8 million, or 66 cents a diluted share. Excluding non-cash after-tax charges, net earnings per diluted share were 74 cents compared with a net loss of 31 cents a year ago.
 
Sales were $231 million, down from nearly $258 million. Company leaders said the drop in sales was due to a sales volume decrease partially offset by higher selling prices and a more favorable sales mix. Part of the sales volume decrease was due to the business selling off excess inventories last year, while inventories now are more in balance. 
 
This week, analysts at TheStreet Ratings upgraded Seneca Foods' stock from hold to buy. They noted strengths such as the company's growth in net income, attractive valuation levels, good cash flow from operations, increase in stock price during the past year and impressive record of growth in earnings per share.
 
The analysts said those strengths outweighed the company's generally poor debt management.
 
Shares of Seneca Foods (Nasdaq: SENEA) were trading at midweek around $25.40. The stock's 52-week range is $18.13 to $29.78.
 
Seneca Foods ranked 30th on the most recent Rochester Business Journal list of manufacturers with 180 local workers.
 

8/17/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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