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Seneca Foods Corp (SENEA)·Q4 2023 Earnings Summary

Executive Summary

  • Q4 FY2023 net sales were $331.1M, down 0.4% YoY; diluted EPS was -$1.20 versus $0.77 in the prior-year quarter, as gross margin compressed to 5.3% (vs. 8.0% YoY) largely due to a higher LIFO charge .
  • Full-year FY2023 delivered record net sales of $1.509B and FIFO EBITDA of $212.0M despite an unprecedented non-cash LIFO charge of $100.0M; management highlighted strong supply chain execution and replenished inventories entering FY2024 .
  • Quarter-on-quarter, revenue fell from $473.3M in Q3 to $331.1M in Q4 and margin contracted from 11.4% to 5.3%, reflecting seasonal mix and the LIFO headwind; operating income swung to a loss of -$5.3M in Q4 from +$29.8M in Q3 .
  • The company did not issue formal numeric guidance and no Q4 FY2023 earnings call transcript was available in our document catalog; consensus estimates via S&P Global were unavailable for Q4 FY2023 (tool returned an error), limiting beat/miss assessment versus Street .

What Went Well and What Went Wrong

What Went Well

  • Record FY2023 results on a FIFO basis: “record sales and FIFO EBITDA” with FIFO EBITDA of $212.0M, underscoring strong underlying operations despite inflation and LIFO .
  • Supply chain resilience: “Significant past investments in our operating facilities paid off as our supply chain operated admirably this year” .
  • Inventory position improved: “Entering fiscal 2024, we have replenished our inventory levels… and are in position to serve our customers’ needs” .

What Went Wrong

  • Q4 profitability weakness: diluted EPS of -$1.20 and operating loss of -$5.3M, with gross margin declining to 5.3% (vs. 8.0% YoY), driven by a $20.7M LIFO impact in the quarter .
  • Volume softness: Q4 net sales declined YoY due to lower volumes, partially offset by higher pricing, highlighting consumer demand/volume pressures .
  • Rising financing costs: interest expense rose to $6.3M in Q4 (vs. $1.5M YoY), adding to the earnings headwind .

Financial Results

Quarter-over-Quarter (Q2 → Q3 → Q4 FY2023)

MetricQ2 FY2023Q3 FY2023Q4 FY2023
Revenue ($USD Millions)$439.842 $473.254 $331.063
Diluted EPS ($USD)$2.03 $2.74 -$1.20
Gross Margin (%)9.5% 11.4% 5.3%
Operating Income ($USD Millions)$21.836 $29.817 -$5.313
LIFO Impact on Operating Earnings ($USD Millions)-$29.2 -$30.9 -$20.7
Interest Expense ($USD Millions)$2.370 $4.277 $6.288

Year-over-Year for Q4

MetricQ4 FY2022Q4 FY2023
Revenue ($USD Millions)$332.389 $331.063
Diluted EPS ($USD)$0.77 -$1.20
Gross Margin (%)8.0% 5.3%
Operating Income ($USD Millions)$7.135 -$5.313
LIFO Impact on Operating Earnings ($USD Millions)-$5.1 -$20.7

Full-Year FY2023 vs FY2022

MetricFY2022FY2023
Revenue ($USD Millions)$1,385.280 $1,509.352
Net Earnings ($USD Millions)$51.007 $33.138
Diluted EPS ($USD)$5.79 $4.20
EBITDA ($USD Millions)$124.833 $112.002
FIFO EBITDA ($USD Millions)$160.654 $212.036
LIFO Charge ($USD Millions)$35.821 $100.034
Gross Margin (%)10.7% 9.0%

Segment Breakdown

SegmentQ4 FY2023
Not disclosed in Q4 materials—

KPIs and Drivers (Quarterly)

KPIQ2 FY2023Q3 FY2023Q4 FY2023
Pricing/Mix CommentaryPricing advances minimized inflation impact Pricing actions and favorable mix supported margins Higher selling prices offset lower volumes
Supply ChainInventory sufficient to support needs Mitigated supply chain challenges Supply chain operated admirably; inventories replenished

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY2024Not providedNot providedMaintained (no formal guidance)
MarginsFY2024Not providedNot providedMaintained (no formal guidance)
OpEx / OI&EFY2024Not providedNot providedMaintained (no formal guidance)
Tax RateFY2024Not providedNot providedMaintained (no formal guidance)
Segment GuidanceFY2024Not providedNot providedMaintained (no formal guidance)
DividendsFY2024Not providedNot providedMaintained (no formal guidance)

Earnings Call Themes & Trends

TopicQ2 FY2023 (Oct 1, 2022)Q3 FY2023 (Dec 31, 2022)Q4 FY2023 (Mar 31, 2023)Trend
Inflation/LIFO“Inflation continues to have an impact… non-cash pre-tax LIFO charge of $29.2M” “Persistent inflationary pressures… another large non-cash LIFO charge” “Unprecedented non-cash LIFO charge of $100M” (FY total); Q4 LIFO hit -$20.7M LIFO headwind escalated through year; quarterly impact moderated in Q4 vs Q3 but FY total unusually high
Pricing ActionsCost mitigation and “pricing advances” to reflect persistent inflation “Pricing actions to minimize the impact of inflation” Higher selling prices partially offset lower volume Ongoing pricing actions to offset cost inflation
Supply Chain“Inventory levels are sufficient to fully support customer needs” Team worked to “mitigate supply chain challenges” “Supply chain operated admirably… replenished inventory levels entering FY2024” Improving inventory position; stable operations
LaborCost pressures for labor noted via inflation narrative Cost increases, particularly for raw materials and labor “Continued cost pressures for labor and raw materials” Persistent labor cost pressure
Demand/VolumesYoY growth driven by price/mix YoY growth driven by price/mix Q4 YoY decline due to lower volumes, partially offset by higher prices Volume softness in Q4

Management Commentary

  • “Seneca Foods had an excellent fiscal 2023, delivering record sales and FIFO EBITDA, despite continued cost pressures for labor and raw materials which led to an unprecedented non-cash LIFO charge of $100M.” — Paul Palmby, President & CEO .
  • “Significant past investments in our operating facilities paid off as our supply chain operated admirably this year amid a challenging environment.” — Paul Palmby .
  • “Entering fiscal 2024, we have replenished our inventory levels… and are in position to serve our customers’ needs.” — Paul Palmby .
  • Prior quarter context: “Third quarter results delivered solid sales and earnings growth despite persistent inflationary pressures that led to another large non-cash LIFO charge.” — Paul Palmby .
  • Q2 context: “Inflation continues to have an impact on our reported earnings… however, through cost mitigation and needed pricing advances… we have been able to minimize the impact.” — Paul Palmby .

Q&A Highlights

  • No Q4 FY2023 earnings call transcript was available in our document catalog; thus, no Q&A highlights or call-based guidance clarifications could be extracted.

Estimates Context

  • We attempted to retrieve Wall Street consensus estimates via S&P Global for Q4 FY2023 (EPS, revenue, EBITDA), but the request returned an error (daily limit exceeded), and estimates were unavailable for comparison. As a result, we cannot classify Q4 as a beat/miss versus Street for EPS or revenue.
  • Implication: Analysts may need to adjust models for higher-than-anticipated LIFO impacts and interest expense, given the Q4 swing to a net loss despite price actions and supply chain execution .

Key Takeaways for Investors

  • Q4 FY2023 showed seasonal and cost-driven compression: margin fell to 5.3% and EPS to -$1.20 as the quarter absorbed a $20.7M LIFO hit and higher interest expense; underlying demand showed price resilience but volumes softened .
  • Full-year fundamentals on FIFO were strong: record $1.509B sales and $212.0M FIFO EBITDA reflect durable operations; consider normalizing for LIFO to assess core earnings power .
  • Pricing actions persist, but inflation and labor/raw material costs remain headwinds; monitor the cadence of cost relief versus pricing in FY2024 .
  • Inventory replenishment into FY2024 reduces supply risk and positions Seneca to serve customers; watch for volume recovery and mix improvements .
  • Absence of formal guidance and lack of an earnings call transcript limit near-term visibility; focus on cash generation, interest expense trajectory, and LIFO normalization in upcoming quarters .
  • Short-term trading: headline GAAP loss and margin compression could weigh on sentiment; however, FIFO EBITDA strength and inventory positioning are constructive for medium-term normalization .
  • Medium-term thesis: a stable private-label and branded canned produce platform with improving inventories and past capacity investments can drive steady FIFO results as inflation pressures ease and volume normalizes .