Executive Summary

Fiscal Q2 2023 delivered solid year-over-year growth: revenue rose to $439.8M, diluted EPS reached $2.03, and net earnings improved to $16.1M, driven primarily by higher selling prices/mix despite inflation-related LIFO pressure .
Sequentially, results strengthened materially vs Q1 2023 (revenue $265.2M, diluted EPS $0.62), supported by normalized inventory and a successful raw product pack season that helped fully support customer needs .
Gross margin contracted year over year to 9.5% due to a larger non-cash LIFO charge ($29.2M pre-tax), but operational performance remained resilient on a FIFO basis (FIFO EBITDA $62.6M) .
No formal guidance was provided; management emphasized pricing actions and cost mitigation amid persistent inflation and labor/raw material cost increases—key near-term stock narrative drivers alongside LIFO normalization trajectory .

What Went Well and What Went Wrong

What Went Well

Pricing actions and improved mix supported revenue growth: “Net sales…$439.8 million…The year-over-year increase…mostly from higher selling prices/improved sales mix” .
Operational execution and inventory: “With a successful raw product pack season, inventory levels are sufficient to fully support customer needs” .
Underlying performance on FIFO basis: FIFO EBITDA rose to $62.6M in Q2, reflecting strong operations ex-LIFO .

What Went Wrong

Inflation drove a large non-cash LIFO charge, compressing reported margins: “Gross margin…9.5%…year-over-year decrease mainly due to a $20.4 million increase in the LIFO charge” and a Q2 pre-tax LIFO charge of $29.2M .
Elevated cost environment persisted (labor, raw materials), necessitating continued pricing actions and cost mitigation efforts .
Interest expense increased year over year, reflecting higher rates and/or leverage dynamics (Q2 interest expense $2.37M vs $1.34M prior year) .

Financial Results

Quarterly Comparison (oldest → newest)

Metric	Q1 2023 (3M ended Jul 2, 2022)	Q2 2023 (3M ended Oct 1, 2022)	Q3 2023 (3M ended Dec 31, 2022)
Revenue ($USD Millions)	$265.2	$439.8	$473.3
Gross Margin (%)	8.6%	9.5%	11.4%
Operating Income ($MM)	$6.6	$21.8	$29.8
Net Earnings ($MM)	$5.1	$16.1	$21.1
Diluted EPS ($)	$0.62	$2.03	$2.74
EBITDA ($MM)	$17.9	$33.4	$42.3
FIFO EBITDA ($MM)	$37.1	$62.6	$73.2
LIFO Charge (Pre-tax, $MM)	$19.2	$29.2	$30.9

Q2 Year-over-Year Comparison

Metric	Q2 2023 (Oct 1, 2022)	Q2 2022 (Oct 2, 2021)	YoY Change
Revenue ($USD Millions)	$439.8	$372.3	+$67.5 (mostly price/mix)
Gross Margin (%)	9.5%	11.5%	-200 bps (LIFO-driven)
Operating Income ($MM)	$21.8	$21.8	~Flat
Net Earnings ($MM)	$16.1	$11.7	+$4.5
Diluted EPS ($)	$2.03	$1.31	+$0.72
FIFO EBITDA ($MM)	$62.6	$34.4	+$28.2
LIFO Charge ($MM, pre-tax)	$29.2	$8.8	+$20.4

KPIs (Q2 2023)

KPI	Value	Notes
FIFO EBITDA ($MM)	$62.6	Strong operating performance ex-LIFO
EBITDA ($MM)	$33.4	Includes LIFO impact
LIFO Charge ($MM)	$29.2	Primary driver of reported margin compression
Interest Expense ($MM)	$2.37	Higher vs prior year

Note: No segment revenue breakdown disclosed in the press release .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2023/Q3 onward	Not provided	Not provided	Maintained (no formal guidance)
Gross Margin	FY2023/Q3 onward	Not provided	Not provided	Maintained (no formal guidance)
LIFO/Inventory	FY2023/Q3 onward	Not provided	Commentary only	Management cites persistent inflation/LIFO impacts; inventories sufficient

No formal numeric guidance was issued in Q2 2023 materials .

Earnings Call Themes & Trends

(Note: No earnings call transcript found for Q2 2023; themes are derived from management press releases.)

Topic	Previous Mentions (Q1 2023)	Current Period (Q2 2023)	Trend	Prior Quarter (Q3 2023) Context
Inflation & LIFO	Historic inflation created significant non-cash LIFO charge; adjusted net earnings strong despite pressure	Large non-cash LIFO charge impacted reported margins; GM down YoY due to LIFO	Persistent headwind, moderating later	Continued inflationary pressures necessitated pricing actions; another large LIFO charge
Pricing/Mix	Strong sales growth driven by pricing actions	YoY revenue increase mostly from higher selling prices/improved mix	Pricing offsetting costs	Pricing actions continued amid cost increases
Supply Chain & Inventory	Solid start to raw product pack increased inventory; supports customer demand	Successful raw product pack; inventories sufficient to support needs	Inventory normalization	Team working diligently to mitigate supply chain challenges
Labor & Raw Materials	Higher raw material/labor costs pressuring results	Cost mitigation efforts continue amid inflation	Ongoing	Cost increases required continued actions
Operations/Facilities	Past investments improved supply chain performance (noted later in FY2023)	—	Strengthening	Supply chain operated admirably; pricing actions minimized impact

Management Commentary

“Inflation continues to have an impact on our reported earnings as a non-cash pre-tax LIFO charge of $29.2 million was incurred…However, through cost mitigation and needed pricing advances…we have been able to minimize the impact on our results. In addition, with a successful raw product pack season, inventory levels are sufficient to fully support customer needs.” — Paul Palmby, President & CEO (Q2 2023 press release) .
“First quarter results delivered strong sales growth mostly driven by pricing actions…historic inflation has created a significant non-cash LIFO charge…we had a solid start to our raw product pack that has helped increase our inventory levels.” — Paul Palmby (Q1 2023 press release) .
“Third quarter results delivered solid sales and earnings growth despite persistent inflationary pressures that led to another large non-cash LIFO charge…our team has worked diligently to mitigate the supply chain challenges we have faced.” — Paul Palmby (Q3 2023 press release) .

Q&A Highlights

No Q2 2023 earnings call transcript or Q&A was found despite targeted searches, suggesting the company did not host a public call or transcript was not made available [Search attempt result: no transcripts in catalog; Internet search returned none] .

Estimates Context

Wall Street consensus estimates via S&P Global for Q2 2023 were unavailable at time of request due to data access limits; as a result, beats/misses vs consensus cannot be determined. Analysts may need to refine LIFO assumptions and inflation sensitivity in models given the magnitude of non-cash charges and demonstrated pricing power [GetEstimates error].

Key Takeaways for Investors

Price/mix strength is offsetting cost inflation, driving YoY revenue and EPS improvement despite LIFO pressure—focus on sustainability of pricing power into FY2023/FY2024 .
Underlying operations are robust on a FIFO basis (Q2 FIFO EBITDA $62.6M), supporting medium-term margin normalization as LIFO charges moderate .
Inventory normalization and a successful raw pack reduce out-of-stock risk and support customer service levels—positive for near-term revenue cadence .
Watch interest expense and rate/leverage dynamics; higher interest burden is a secondary headwind to reported earnings .
With no formal guidance, monitor subsequent quarters for explicit margin, LIFO, and capex signals; management commentary remains constructive but cost vigilance is required .
Absent a Q2 earnings call, the press release is the primary narrative; continued disclosure on inflation, labor/raw materials, and supply chain mitigation will drive sentiment .
Near-term trading implications: prints tied to evidence of LIFO moderation and confirmation of pricing resilience; medium-term thesis hinges on normalized costs translating to higher reported margins and EPS compounding on a FIFO basis .

Seneca Foods Corp (SENEA)·Q2 2023 Earnings Summary