Seneca Foods Corp: Form 10-Q for the period ended Jun 27, 2026

Seneca Foods Corporation is a leading provider of packaged fruits and vegetables, with facilities located throughout the United States. Our product offerings include canned, frozen and jarred produce, and snack chips that are sold under private label as well as national and regional brands that the Company owns or licenses, including Aunt Nellie’s®, Cherryman®, Green Giant®, Green Valley®, Libby’s®, READ®, and Seneca®. Our products are sold nationwide by major grocery outlets, including supermarkets, mass merchandisers, limited assortment stores, club stores and dollar stores. We also sell products to foodservice distributors, restaurant chains, industrial markets, other food processors, export customers in approximately 55 countries and federal, state and local governments for school and other food programs. Additionally, the Company packs canned and frozen vegetables under contract packing agreements.

Business Trends

We purchase raw materials, including raw produce, steel, ingredients and packaging materials from growers, commodity processors, steel producers and packaging suppliers. Raw materials and other input costs, such as labor, fuel, fertilizer, utilities and transportation, are subject to fluctuations in price attributable to a number of factors. Certain of the raw materials, namely steel, are subject to import tariffs and other restrictions, and the United States government may periodically impose new or revise existing duties, quotas, tariffs or other restrictions to which the Company may be subject. Fluctuations in commodity prices can lead to retail price volatility and can influence consumer and trade buying patterns. The cost of raw materials, fuel, labor, distribution and other costs related to our operations can increase from time to time significantly and unexpectedly, the impact of which could increase our cost of products sold and reduce our profitability.

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, inflationary pressure, and labor shortages. Additionally, foreign conflicts have disrupted the global economic environment during these years. While the Company has no direct exposure to these foreign conflicts, some of which are ongoing, they have had a negative impact on the global economy which has 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.

We attempt to manage costs by locking in prices through short-term supply contracts, advance grower purchase agreements, and by implementing cost saving measures. We also attempt to offset rising input costs by raising sales prices to our customers. However, increases in the prices we charge our customers may lag behind rising input costs. Competitive pressures and pricing methodologies employed in the various sales channels in which we compete may also limit our ability to raise prices in response to rising costs. To the extent we are unable to avoid or offset any present or future cost increases, our operating results could be materially adversely affected.

Results of Operations

Net Sales:

The following table presents net sales by product category (in thousands):

Three Months Ended June 27, 2026 and June 28, 2025

Net sales totaled $405.2 million for the three months ended June 27, 2026 as compared with $297.5 million for the three months ended June 28, 2025. The overall net sales increase of $107.7 million, or 36.2%, was driven by higher sales volumes contributing an increase of $96.8 million, along with higher selling prices and the impact of product mix which contributed an increase of $10.9 million as compared to the prior year quarter.

Net sales of canned vegetables and frozen vegetables increased by a combined $105.5 million over the prior year quarter. The categories experienced an increase in sales volume equating to $96.0 million, along with $9.5 million from higher selling prices and the impact of product mix. Net sales in the fruit products category increased by $0.9 million mainly driven by an increase in sales volume. Net sales of the snack products category were flat compared to the prior year quarter. Lastly, net sales attributable to the other category increased $1.3 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.

Operating Income:

The following table presents components of operating and non-operating (income) expense as a percentage of net sales (percentages shown as absolute values):

Three Months Ended June 27, 2026 and June 28, 2025

Gross Margin: Gross margin for the three months ended June 27, 2026 was 11.8% as compared to 14.1% for the three months ended June 28, 2025. Gross margin decreased when comparing the year-over-year quarterly periods mainly because the prior year quarter benefited from a larger LIFO credit thereby reducing the cost of products sold on a GAAP basis for that period. The Company’s LIFO credit for the three months ended June 27, 2026 was $3.0 million as compared to $11.8 million for the three months ended June 28, 2025. Excluding the LIFO credit, the gross margin was steady year-over-year as the percentage increase in cost of products sold was generally consistent with the percentage increase in net sales. 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.

Selling, General, and Administrative: Selling, general and administrative expense for the three months ended June 27, 2026 increased $1.7 million from the three months ended June 28, 2025. Selling, general, and administrative expense as a percentage of net sales for the three months ended June 27, 2026, was 5.0% as compared with 6.3% for the prior year quarter. The decrease in selling, general, and administrative expense as a percentage of net sales was mainly driven by the increase in net sales and the fixed nature of certain expenses.

Other Operating Expense (Income), net: The Company had other operating expense, net of $1.2 million during the three months ended June 27, 2026, which was driven primarily by $1.4 million of transition service fees resulting from the business acquisition in fiscal year 2026. During the three months ended June 28, 2025, the Company had other operating income, net of $0.1 million, which was driven primarily by the sale of various spare equipment.

Non-Operating (Income) Expense:

Other Non-Operating Income: Other non-operating income totaled $3.0 million and $1.9 million for the three months ended June 27, 2026 and June 28, 2025, respectively, and is comprised of the non-service related pension amounts that are actuarially determined.

Interest Expense, net: Interest expense as a percentage of net sales was 0.8% for the three months ended June 27, 2026, as compared to 1.8% for the three months ended June 28, 2025. Interest expense decreased from $5.4 million in the prior year quarter to $3.1 million in the current quarter primarily driven by lower average borrowings outstanding under the Company’s revolving credit facility, a lower weighted average interest rate for the revolving credit facility as compared to the prior year quarter, and the current quarter did not have any interest incurred for Term Loan A-1.

Income Taxes:

The Company’s effective tax rate was 25.1% and 24.5% for the three months ended June 27, 2026 and June 28, 2025, respectively. The prior year quarter benefited from a decrease in the valuation allowance related to the usage of state tax credits, although there was no impact to the valuation allowance in the current quarter, therefore resulting in an increase of 0.5% to the current quarter effective tax rate on a comparative basis. There were no other significant items impacting the change in effective tax rate.

Liquidity and Capital Resources

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

(1) Equivalent common shares are either common shares or, for convertible preferred shares, the number of common shares that the preferred shares are convertible into. See Note 11 of the Notes to Consolidated Financial Statements of the Company’s 2026 Annual Report on Form 10-K for conversion details.

Material Cash Requirements: The Company’s primary liquidity requirements include debt service, capital expenditures and working capital needs. The Company may also seek strategic acquisitions to leverage existing capabilities and further build upon its existing business. Liquidity requirements are funded primarily through cash generated from operations and external sources of financing, including the revolving credit facility. The Company may also utilize its receivables purchase program to manage short-term liquidity and provide working capital flexibility, as needed.

During the preceding fiscal years, working capital needs trended higher than previously experienced by the Company in part because of larger annual pack sizes needed to replenish the Company’s post-pandemic inventory levels to meet customer demand, and because of supply chain challenges and inflationary pressure in the steel industry which impacted can manufacturing operations. To successfully navigate the uncertainty driven by inflation and import tariffs, and a desire to diversify its steel supply, the Company employed a strategic approach during those fiscal years and increased steel coil purchases to better position itself for subsequent years. The higher cost of steel coil raw materials translated into an elevated container cost and ultimately resulted in an increased cost per unit for the associated finished good product. Working capital was likewise unfavorably impacted during the preceding fiscal years as the Company experienced material cost increases implemented by suppliers affecting various other production inputs aside from steel. These economic conditions contributed to higher cash outflows and an increased cost per unit for the associated finished good product.

During fiscal year 2025, the Company experienced an easing of working capital needs. 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 smaller than originally planned. This in turn resulted in a higher-cost seasonal pack on a per unit basis for fiscal year 2025; although, the overall cash requirements showed improvement as compared to the preceding fiscal years.

The Company’s fiscal year 2026 seasonal pack benefited from improved crop yields and less challenging growing conditions in certain regions, which contributed to an overall larger pack size as compared to the prior year. The Company’s plant locations ran more steadily during the harvesting and production process without as many weather-related interruptions experienced in fiscal year 2025. These factors resulted in an overall lower-cost seasonal pack on a per unit basis for fiscal year 2026.

With fiscal year 2027 underway and the early stages of the Company’s seasonal pack commencing during the current quarter, the principal focus will be on working capital needs to fund the pack as it progresses and inventory levels are replenished.

A strong cash position leading into fiscal year 2027, coupled with continued positive cash flows provided by operating activities, allowed the Company to minimize use of its revolving credit facility during the three months ended June 27, 2026. Additionally, the Company utilized cash on hand to fund the $50.0 million voluntary pre-payment on Amended Term Loan A-2 as discussed in Note 6. 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.

Summary of Cash Flows: The following table presents a summary of the Company’s cash flows from operating, investing and financing activities (in thousands):

Net Cash Provided by Operating Activities: For the three months ended June 27, 2026, cash provided by operating activities was $109.1 million, which consisted of $82.4 million from changes in operating assets and liabilities, coupled with net earnings of $19.5 million and partially offset by non-cash charges of $7.2 million. The non-cash charges were mainly comprised of $10.6 million of depreciation and amortization and $1.3 million of non-cash lease expense, offset by a $3.0 million LIFO credit and a $1.9 million increase in pension benefit. 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.

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.

The cash requirements of the business fluctuate significantly throughout the year to coincide with the seasonal growing cycles of vegetables. The majority of the inventories are produced during the packing months, from June through November, and are then sold over the following twelve months. Cash flow from operating activities is one of the Company’s main sources of liquidity, excluding usual seasonal working capital swings.

Net Cash Used in Investing Activities: Net cash used in investing activities was $15.5 million for the three months ended June 27, 2026, which was largely driven by cash used for capital expenditures of $17.2 million. Partially offsetting that amount was $1.7 million received upon settlement of the contingent consideration resulting from the business acquisition in fiscal year 2026.

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.

Net Cash Used in Financing Activities: Net cash used in financing activities was $56.6 million for the three months ended June 27, 2026, driven primarily by payments of $54.4 million on its term loans and finance obligation. This included a $50.0 million pre-payment for Amended Term Loan A-2 during the current quarter. The Company also used cash of $1.4 million to purchase treasury stock and made payments of $0.8 million on finance leases. The Company utilized its revolving credit facility, although borrowings and repayments both equated to $0.6 million during the three month period, thereby resulting in no change to the ending balance as compared to the beginning of the fiscal year.

Net cash used in financing activities was $80.8 million for the three months ended June 28, 2025, driven primarily by payments of $85.4 million on its term loans and finance obligation. This included full payment of $81.0 million for the Term Loan A-1 upon maturity during the current quarter. The Company also used cash of $3.8 million to purchase treasury stock and made payments of $1.0 million on finance leases. Partially offsetting the cash outflows, the Company had net borrowings of $9.4 million on its revolving credit facility.

Impact of Seasonality on Financial Position and Results of Operations

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. The last fiscal quarter ending March 31 is the optimal time for maintenance, repairs and equipment changes in the Company’s seasonal 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 the fourth 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.

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 certain finished goods to co-pack customers 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.

Non-GAAP Financial Measures

Adjusted net earnings, EBITDA, and FIFO EBITDA are non-GAAP financial measures and are provided for informational purposes only. The Company believes these non-GAAP financial measures provide investors with helpful information to evaluate financial performance, perform comparisons from period to period, and to compare results against the Company’s industry peers. A non-GAAP financial measure is defined as a numerical measure of the Company’s financial performance that excludes or includes amounts so as to be different from the most directly comparable measure calculated and presented in accordance with GAAP in the condensed consolidated balance sheets and related condensed consolidated statements of net earnings, comprehensive income, stockholders’ equity and cash flows. The Company does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP.

Adjusted net earnings are calculated on a FIFO basis which excludes the impact from the application of LIFO. Set forth below is a reconciliation of reported net earnings before income taxes to adjusted net earnings (in thousands):

(1) For the three months ended June 27, 2026 and June 28, 2025, income taxes on adjusted earnings before taxes were calculated using the income tax provision amounts of $6.5 million and $4.8 million, respectively, and applying the statutory tax rates of 24.7% and 24.8%, respectively, for each of the respective periods to the pre-tax LIFO credit.

The Company believes EBITDA is often a useful measure of a Company’s operating performance because EBITDA excludes charges for depreciation, amortization, non-cash lease expense, and interest expense as well as the Company’s provision for income tax expense. EBITDA is frequently used as one of the bases for comparing businesses in the Company’s industry. FIFO EBITDA also excludes non-cash charges related to the LIFO inventory valuation method. The Company’s revolving credit facility and term loan agreements use FIFO EBITDA in the financial covenants thereunder.

Set forth below is a reconciliation of reported net earnings to EBITDA and FIFO EBITDA (in thousands):

(1) Includes non-cash lease expense consistent with financial covenant calculations.

(2) Reconciling item needed to exclude debt issuance cost amortization from the amount shown for interest expense.

New Accounting Standards

Refer to Note 1, “Basis of Preparation and Presentation”, to the Condensed Consolidated Financial Statements contained herein.

Critical Accounting Estimates

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, 2026. There were no material changes to the Company's critical accounting policies or estimates during the three months ended June 27, 2026.

Forward-Looking Information

This Quarterly Report on Form 10-Q contains “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they address future events, developments, and results and do not relate strictly to historical facts. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain the words "will," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "seeks," "should," "likely," "targets," "may," "can" and variations thereof and similar expressions. Forward-looking statements are subject to known and unknown risks, uncertainties, and other important factors that could cause actual results to differ materially from those expressed. We believe important factors that could cause actual results to differ materially from our expectations include, but are not limited to, the following:

• the effects of rising costs and availability of raw fruit and vegetables, steel, ingredients, packaging, other raw materials, distribution and labor;
• crude oil prices and their impact on distribution, packaging and energy costs;
• the impact of tariffs and other governmental trade restrictions;
• an overall labor shortage, ability to retain a sufficient seasonal workforce, lack of skilled labor, labor inflation or increased turnover impacting our ability to recruit and retain employees;
• climate and weather affecting growing conditions and crop yields;
• our ability to successfully implement sales price increases and cost saving measures to offset cost increases;
• the loss of significant customers or a substantial reduction in orders from these customers;
• effectiveness of our marketing and trade promotion programs;
• competition, changes in consumer preferences, demand for our products and local economic and market conditions;
• the impact of a pandemic on our business, suppliers, customers, consumers and employees;
• unanticipated expenses, including, without limitation, litigation or legal settlement expenses;
• product liability claims;
• the anticipated needs for, and the availability of, cash;
• the availability of financing;
• leverage and the ability to service and reduce debt;
• foreign currency exchange and interest rate fluctuations;
• the risks associated with the expansion of our business;
• the ability to successfully integrate acquisitions into our operations;
• our ability to protect information systems against, or effectively respond to, a cybersecurity incident or other disruption;
• other factors that affect the food industry generally, including:
• recalls if products become adulterated or misbranded, liability if product consumption causes injury, ingredient disclosure including labeling laws and regulations, and the possibility that consumers could lose confidence in the safety and quality of certain food products;
• competitors’ pricing practices and promotional spending levels;
• fluctuations in the level of our customers’ inventories and credit and other business risks related to our customers operating in a challenging economic and competitive environment; and
• the risks associated with third-party suppliers, including the risk that any failure by one or more of our third-party suppliers to comply with food safety or other laws and regulations may disrupt our supply of raw materials or certain finished goods products or injure our reputation; and
• changes in, or the failure or inability to comply with, U.S., foreign and local governmental regulations, including health, environmental, and safety regulations.

Any of these factors, as well as such other factors as discussed in our other periodic filings with the SEC, could cause our actual results to differ materially from our anticipated results. The information provided in this Form 10-Q is based upon the facts and circumstances known as of the date of this report, and any forward-looking statements made by us in this Form 10-Q speak only as of the date on which they are made. Except as required by law, we undertake no obligation to update these forward-looking statements after the date of this Form 10-Q to reflect events or circumstances after such date, or to reflect the occurrence of unanticipated events.

In the ordinary course of business, the Company is exposed to various market risk factors, including changes in general economic conditions, competition and raw material pricing and availability. There have been no material changes to the Company’s exposure to market risk since March 31, 2026. In addition, the Company is exposed to fluctuations in interest rates, primarily related to its revolving credit facility and Amended Term Loan A-2. To manage interest rate risk, the Company uses both fixed and variable interest rate debt plus fixed interest rate lease obligations. The interest rate on the finance obligation is fixed and not subject to interest rate volatility.

The Company maintains a system of internal and disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported on a timely basis. The Company’s Board of Directors, operating through its Audit Committee, which is composed entirely of independent outside directors, provides oversight to the financial reporting process.

An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of June 27, 2026, our disclosure controls and procedures were effective. The Company continues to examine, refine and formalize its disclosure controls and procedures and to monitor ongoing developments in this area.

There have been no changes during the period covered by this report to the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

There have been no material changes to the risk factors disclosed in the Company’s Annual Report Form 10-K for the period ended March 31, 2026, except to the extent factual information disclosed elsewhere in this Form 10-Q relates to such risk factors.